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HEALTH COVERAGE AVAILABILITY AND AFFORDABILITY ACT OF 1996
(House of Representatives - March 28, 1996)

Text of this article available as: TXT PDF [Pages H3045-H3147] {time} 1815 HEALTH COVERAGE AVAILABILITY AND AFFORDABILITY ACT OF 1996 Mr. ARCHER. Mr. Speaker, pursuant to House Resolution 392, I call up the bill (H.R. 3103), to amend the Internal Revenue Code of 1986 to improve portability and continuity of health insurance coverage in the group and individual markets, to combat waste, fraud, and abuse in health insurance and health care delivery, to promote the use of medical savings accounts, to improve access to long-term care services and coverage, to simplify the administration of health insurance, and for other purposes, and ask for its immediate consideration in the House. The Clerk read the title of the bill. The SPEAKER pro tempore (Mr. Combest). Pursuant to House Resolution 392, the amendment in the nature of a substitute consisting of the text of H.R. 3160 modified by the amendment specified in part 1 of House Report 104-501 is adopted. The text of H.R. 3103 consisting of the text of H.R. 3160, as modified, is as follows: H.R. 3160 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) Short Title.--This Act may be cited as the ``Health Coverage Availability and Affordability Act of 1996''. (b) Table of Contents.--The table of contents of this Act is as follows: Sec. 1. Short title; table of contents. TITLE I--IMPROVED AVAILABILITY AND PORTABILITY OF HEALTH INSURANCE COVERAGE Subtitle A--Coverage Under Group Health Plans Sec. 101. Portability of coverage for previously covered individuals. Sec. 102. Limitation on preexisting condition exclusions; no application to certain newborns, adopted children, and pregnancy. Sec. 103. Prohibiting exclusions based on health status and providing for enrollment periods. Sec. 104. Enforcement. Subtitle B--Certain Requirements for Insurers and HMOs in the Group and Individual Markets Part 1--Availability of Group Health Insurance Coverage Sec. 131. Guaranteed availability of general coverage in the small group market. Sec. 132. Guaranteed renewability of group coverage. [[Page H3046]] Part 2--Availability of Individual Health Insurance Coverage Sec. 141. Guaranteed availability of individual health insurance coverage to certain individuals with prior group coverage. Sec. 142. Guaranteed renewability of individual health insurance coverage. Part 3--Enforcement Sec. 151. Incorporation of provisions for State enforcement with Federal fallback authority. Subtitle C--Affordable and Available Health Coverage Through Multiple Employer Pooling Arrangements Sec. 161. Clarification of duty of the Secretary of Labor to implement provisions of current law providing for exemptions and solvency standards for multiple employer health plans. ``Part 7--Rules Governing Regulation of Multiple Employer Health Plans ``Sec. 701. Definitions. ``Sec. 702. Clarification of duty of the Secretary to implement provisions of current law providing for exemptions and solvency standards for multiple employer health plans. ``Sec. 703. Requirements relating to sponsors, boards of trustees, and plan operations. ``Sec. 704. Other requirements for exemption. ``Sec. 705. Maintenance of reserves. ``Sec. 706. Notice requirements for voluntary termination. ``Sec. 707. Corrective actions and mandatory termination. ``Sec. 708. Additional rules regarding State authority.''. Sec. 162. Affordable and available fully insured health coverage through voluntary health insurance associations. Sec. 163. State authority fully applicable to self-insured multiple employer welfare arrangements providing medical care which are not exempted under new part 7. Sec. 164. Clarification of treatment of single employer arrangements. Sec. 165. Clarification of treatment of certain collectively bargained arrangements. Sec. 166. Treatment of church plans. Sec. 167. Enforcement provisions relating to multiple employer welfare arrangements. Sec. 168. Cooperation between Federal and State authorities. Sec. 169. Filing and disclosure requirements for multiple employer welfare arrangements offering health benefits. Sec. 170. Single annual filing for all participating employers. Sec. 171. Effective date; transitional rule. Subtitle D--Definitions; General Provisions Sec. 191. Definitions; scope of coverage. Sec. 192. State flexibility to provide greater protection. Sec. 193. Effective date. Sec. 194. Rule of construction. Sec. 195. Findings relating to exercise of commerce clause authority. TITLE II--PREVENTING HEALTH CARE FRAUD AND ABUSE; ADMINISTRATIVE SIMPLIFICATION; MEDICAL LIABILITY REFORM Sec. 200. References in title. Subtitle A--Fraud and Abuse Control Program Sec. 201. Fraud and abuse control program. Sec. 202. Medicare integrity program. Sec. 203. Beneficiary incentive programs. Sec. 204. Application of certain health anti-fraud and abuse sanctions to fraud and abuse against Federal health care programs. Sec. 205. Guidance regarding application of health care fraud and abuse sanctions. Subtitle B--Revisions to Current Sanctions for Fraud and Abuse Sec. 211. Mandatory exclusion from participation in medicare and State health care programs. Sec. 212. Establishment of minimum period of exclusion for certain individuals and entities subject to permissive exclusion from medicare and State health care programs. Sec. 213. Permissive exclusion of individuals with ownership or control interest in sanctioned entities. Sec. 214. Sanctions against practitioners and persons for failure to comply with statutory obligations. Sec. 215. Intermediate sanctions for medicare health maintenance organizations. Sec. 216. Additional exception to anti-kickback penalties for discounting and managed care arrangements. Sec. 217. Criminal penalty for fraudulent disposition of assets in order to obtain medicaid benefits. Sec. 218. Effective date. Subtitle C--Data Collection Sec. 221. Establishment of the health care fraud and abuse data collection program. Subtitle D--Civil Monetary Penalties Sec. 231. Social security act civil monetary penalties. Sec. 232. Clarification of level of intent required for imposition of sanctions. Sec. 233. Penalty for false certification for home health services. Subtitle E--Revisions to Criminal Law Sec. 241. Definitions relating to Federal health care offense. Sec. 242. Health care fraud. Sec. 243. Theft or embezzlement. Sec. 244. False statements. Sec. 245. Obstruction of criminal investigations of health care offenses. Sec. 246. Laundering of monetary instruments. Sec. 247. Injunctive relief relating to health care offenses. Sec. 248. Authorized investigative demand procedures. Sec. 249. Forfeitures for Federal health care offenses. Sec. 250. Relation to ERISA authority. Subtitle F--Administrative Simplification Sec. 251. Purpose. Sec. 252. Administrative simplification. ``Part C--Administrative Simplification ``Sec. 1171. Definitions. ``Sec. 1172. General requirements for adoption of standards. ``Sec. 1173. Standards for information transactions and data elements. ``Sec. 1174. Timetables for adoption of standards. ``Sec. 1175. Requirements. ``Sec. 1176. General penalty for failure to comply with requirements and standards. ``Sec. 1177. Wrongful disclosure of individually identifiable health information. ``Sec. 1178. Effect on State law. Sec. 253. Changes in membership and duties of National Committee on Vital and Health Statistics. Subtitle G--Duplication and Coordination of Medicare-Related Plans Sec. 261. Duplication and coordination of medicare-related plans. Subtitle H--Medical Liability Reform Part 1--General Provisions Sec. 271. Federal reform of health care liability actions. Sec. 272. Definitions. Sec. 273. Effective date. Part 2--Uniform Standards for Health Care Liability Actions Sec. 281. Statute of limitations. Sec. 282. Calculation and payment of damages. Sec. 283. Alternative dispute resolution. TITLE III--TAX-RELATED HEALTH PROVISIONS Sec. 300. Amendment of 1986 code. Subtitle A--Medical Savings Accounts Sec. 301. Medical savings accounts. Subtitle B--Increase in Deduction for Health Insurance Costs of Self- Employed Individuals Sec. 311. Increase in deduction for health insurance costs of self- employed individuals. Subtitle C--Long-Term Care Services and Contracts Part I--General Provisions Sec. 321. Treatment of long-term care insurance. Sec. 322. Qualified long-term care services treated as medical care. Sec. 323. Reporting requirements. Part II--Consumer Protection Provisions Sec. 325. Policy requirements. Sec. 326. Requirements for issuers of long-term care insurance policies. Sec. 327. Coordination with State requirements. Sec. 328. Effective dates. Subtitle D--Treatment of Accelerated Death Benefits Sec. 331. Treatment of accelerated death benefits by recipient. Sec. 332. Tax treatment of companies issuing qualified accelerated death benefit riders. Subtitle E--High-Risk Pools Sec. 341. Exemption from income tax for State-sponsored organizations providing health coverage for high-risk individuals. Subtitle F--Organizations Subject to Section 833 Sec. 351. Organizations subject to section 833. TITLE IV--REVENUE OFFSETS Sec. 400. Amendment of 1986 Code. Subtitle A--Repeal of Bad Debt Reserve Method for Thrift Savings Associations Sec. 401. Repeal of bad debt reserve method for thrift savings associations. Subtitle B--Reform of the Earned Income Credit Sec. 411. Earned income credit denied to individuals not authorized to be employed in the United States. Subtitle C--Treatment of Individuals Who Lose United States Citizenship Sec. 421. Revision of income, estate, and gift taxes on individuals who lose United States citizenship. Sec. 422. Information on individuals losing United States citizenship. Sec. 423. Report on tax compliance by United States citizens and residents living abroad. [[Page H3047]] TITLE I--IMPROVED AVAILABILITY AND PORTABILITY OF HEALTH INSURANCE COVERAGE Subtitle A--Coverage Under Group Health Plans SEC. 101. PORTABILITY OF COVERAGE FOR PREVIOUSLY COVERED INDIVIDUALS. (a) Crediting Periods of Previous Coverage Toward Preexisting Condition Restrictions.--Subject to the succeeding provisions of this section, a group health plan, and an insurer or health maintenance organization offering health insurance coverage in connection with a group health plan, shall provide that any preexisting condition limitation period (as defined in subsection (b)(2)) is reduced by the length of the aggregate period of qualified prior coverage (if any, as defined in subsection (b)(3)) applicable to the participant or beneficiary as of the date of commencement of coverage under the plan. (b) Definitions and Other Provisions Relating to Preexisting Conditions.-- (1) Preexisting condition.-- (A) In general.--For purposes of this subtitle, subject to subparagraph (B), the term ``preexisting condition'' means a condition, regardless of the cause of the condition, for which medical advice, diagnosis, care, or treatment was recommended or received within the 6-month period ending on the day before-- (i) the effective date of the coverage of such participant or beneficiary, or (ii) the earliest date upon which such coverage could have been effective if there were no waiting period applicable, whichever is earlier. (B) Treatment of genetic information.--For purposes of this section, genetic information shall not be considered to be a preexisting condition, so long as treatment of the condition to which the information is applicable has not been sought during the 6-month period described in subparagraph (A). (2) Preexisting condition limitation period.--For purposes of this subtitle, the term ``preexisting condition limitation period'' means, with respect to coverage of an individual under a group health plan or under health insurance coverage, the period during which benefits with respect to treatment of a condition of such individual are not provided based on the fact that the condition is a preexisting condition. (3) Aggregate period of qualified prior coverage.-- (A) In general.--For purposes of this section, the term ``aggregate period of qualified prior coverage'' means, with respect to commencement of coverage of an individual under a group health plan or health insurance coverage offered in connection with a group health plan, the aggregate of the qualified coverage periods (as defined in subparagraph (B)) of such individual occurring before the date of such commencement. Such period shall be treated as zero if there is more than a 60-day break in coverage under a group health plan (or health insurance coverage offered in connection with such a plan) between the date the most recent qualified coverage period ends and the date of such commencement. (B) Qualified coverage period.-- (i) In general.--For purposes of this paragraph, subject to subsection (c), the term ``qualified coverage period'' means, with respect to an individual, any period of coverage of the individual under a group health plan, health insurance coverage, under title XVIII or XIX of the Social Security Act, coverage under the TRICARE program under chapter 55 of title 10, United States Code, a program of the Indian Health Service, and State health insurance coverage or risk pool, and includes coverage under a health plan offered under chapter 89 of title 5, United States Code. (ii) Disregarding periods before breaks in coverage.--Such term does not include any period occurring before any 60-day break in coverage described in subparagraph (A). (C) Waiting period not treated as a break in coverage.--For purposes of subparagraphs (A) and (B), any period that is in a waiting period for any coverage under a group health plan (or for health insurance coverage offered in connection with a group health plan) shall not be considered to be a break in coverage described in subparagraph (B)(ii). (D) Establishment of period.--A qualified coverage period with respect to an individual shall be established through presentation of certifications described in subsection (c) or in such other manner as may be specified in regulations to carry out this title. (c) Certifications of Coverage; Conforming Coverage.-- (1) In general.--The plan administrator of a group health plan, or the insurer or HMO offering health insurance coverage in connection with a group health plan, shall, on request made on behalf of an individual covered (or previously covered within the previous 18 months) under the plan or coverage, provide for a certification of the period of coverage of the individual under such plan or coverage and of the waiting period (if any) imposed with respect to the individual for any coverage under the plan. (2) Standard method.--Subject to paragraph (3), a group health plan, or insurer or HMO offering health insurance coverage in connection with a group health plan, shall determine qualified coverage periods under subsection (b)(3)(B) by including all periods described in such subsection, without regard to the specific benefits offered during such a period. (3) Alternative method.--Such a plan, insurer, or HMO may elect to make such determination on a benefit-specific basis for all participants and beneficiaries and not to include as a qualified coverage period with respect to a specific benefit coverage during a previous period unless such previous coverage for that benefit was included at the end of the most recent period of coverage. In the case of such an election-- (A) the plan, insurer, or HMO shall prominently state in any disclosure statements concerning the plan or coverage and to each enrollee at the time of enrollment under the plan (or at the time the health insurance coverage is offered for sale in the group health market) that the plan or coverage has made such election and shall include a description of the effect of this election; and (B) upon the request of the plan, insurer, or HMO, the entity providing a certification under paragraph (1)-- (i) shall promptly disclose to the requesting plan, insurer, or HMO the plan statement (insofar as it relates to health benefits under the plan) or other detailed benefit information on the benefits available under the previous plan or coverage, and (ii) may charge for the reasonable cost of providing such information. SEC. 102. LIMITATION ON PREEXISTING CONDITION EXCLUSIONS; NO APPLICATION TO CERTAIN NEWBORNS, ADOPTED CHILDREN, AND PREGNANCY. (a) Limitation of Period.-- (1) In general.--Subject to the succeeding provisions of this section, a group health plan, and an insurer or HMO offering health insurance coverage in connection with a group health plan, shall provide that any preexisting condition limitation period (as defined in section 101(b)(2)) does not exceed 12 months, counting from the effective date of coverage. (2) Extension of period in the case of late enrollment.--In the case of a participant or beneficiary whose initial coverage commences after the date the participant or beneficiary first becomes eligible for coverage under the group health plan, the reference in paragraph (1) to ``12 months'' is deemed a reference to ``18 months''. (b) Exclusion Not Applicable to Certain Newborns and Certain Adoptions.-- (1) In general.--Subject to paragraph (2), a group health plan, and an insurer or HMO offering health insurance coverage in connection with a group health plan, may not provide any limitation on benefits based on the existence of a preexisting condition in the case of-- (A) an individual who within the 30-day period beginning with the date of birth, or (B) an adopted child or a child placed for adoption beginning at the time of adoption or placement if the individual, within the 30-day period beginning on the date of adoption or placement, becomes covered under a group health plan or otherwise becomes covered under health insurance coverage (or covered for medical assistance under title XIX of the Social Security Act). (2) Loss if break in coverage.--Paragraph (1) shall no longer apply to an individual if the individual does not have any coverage described in section 101(b)(3)(B)(i) for a continuous period of 60 days, not counting in such period any days that are in a waiting period for any coverage under a group health plan. (3) Placed for adoption defined.--In this subsection and section 103(e), the term ``placement'', or being ``placed'', for adoption, in connection with any placement for adoption of a child with any person, means the assumption and retention by such person of a legal obligation for total or partial support of such child in anticipation of adoption of such child. The child's placement with such person terminates upon the termination of such legal obligation. (c) Exclusion Not Applicable to Pregnancy.--For purposes of this section, pregnancy shall not be treated as a preexisting condition. (d) Eligibility Period Imposed by Health Maintenance Organizations as Alternative to Preexisting Condition Limitation.--A health maintenance organization which offers health insurance coverage in connection with a group health plan and which does not use the preexisting condition limitations allowed under this section and section 101 with respect to any particular coverage option may impose an eligibility period for such coverage option, but only if such period does not exceed-- (1) 60 days, in the case of a participant or beneficiary whose initial coverage commences at the time such participant or beneficiary first becomes eligible for coverage under the plan, or (2) 90 days, in the case of a participant or beneficiary whose initial coverage commences after the date on which such participant or beneficiary first becomes eligible for coverage. Such an HMO may use alternative methods, from those described in the previous sentence, to address adverse selection as approved by the applicable State authority. For purposes of this subsection, the term ``eligibility period'' means a period which, under the terms of the health insurance coverage offered by the health maintenance organization, must expire before the health insurance coverage becomes effective. Any such eligibility period shall be treated for purposes of this subtitle as a waiting period under the plan and shall run concurrently [[Page H3048]] with any other applicable waiting period under the plan. SEC. 103. PROHIBITING EXCLUSIONS BASED ON HEALTH STATUS AND PROVIDING FOR ENROLLMENT PERIODS. (a) Prohibition of Exclusion of Participants or Beneficiaries Based on Health Status.-- (1) In general.--A group health plan, and an insurer or HMO offering health insurance coverage in connection with a group health plan, may not exclude an employee or his or her beneficiary from being (or continuing to be) enrolled as a participant or beneficiary under the terms of such plan or coverage based on health status (as defined in section 191(c)(6)). (2) Construction.--Nothing in this subsection shall be construed as preventing the establishment of preexisting condition limitations and restrictions to the extent consistent with the provisions of this subtitle. (b) Prohibition of Discrimination in Premium Contributions of Individual Participants or Beneficiaries Based on Health Status.-- (1) In general.--A group health plan, and an insurer or HMO offering health insurance coverage in connection with a group health plan, may not require a participant or beneficiary to pay a premium or contribution which is greater than such premium or contribution for a similarly situated participant or beneficiary solely on the basis of the health status of the participant or beneficiary. (2) Construction.--Nothing in this subsection is intended-- (A) to effect the premium rates an insurer or HMO may charge an employer for health insurance coverage provided in connection a group health plan, (B) to prevent a group health plan (or insurer or HMO in health insurance coverage offered in connection with such a plan) from establishing premium discounts or modifying otherwise applicable copayments or deductibles in return for adherence to programs of health promotion and disease prevention, or (C) to prevent such a plan, insurer, or HMO from varying the premiums or contributions required of participants or beneficiaries based on factors (such as scope of benefits, geographic area of residence, or wage levels) that are not directly related to health status. (c) Enrollment of Eligible Individuals Who Lose Other Coverage.--A group health plan shall permit an uncovered employee who is otherwise eligible for coverage under the terms of the plan (or an uncovered dependent, as defined under the terms of the plan, of such an employee, if family coverage is available) to enroll for coverage under the plan under at least one benefit option if each of the following conditions is met: (1) The employee or dependent was covered under a group health plan or had health insurance coverage at the time coverage was previously offered to the employee or individual. (2) The employee stated in writing at such time that coverage under a group health plan or health insurance coverage was the reason for declining enrollment. (3) The employee or dependent lost coverage under a group health plan or health insurance coverage (as a result of loss of eligibility for the coverage, termination of employment, or reduction in the number of hours of employment). (4) The employee requests such enrollment within 30 days after the date of termination of such coverage. (d) Dependent Beneficiaries.-- (1) In general.--If a group health plan makes family coverage available, the plan may not require, as a condition of coverage of an individual as a dependent (as defined under the terms of the plan) of a participant in the plan, a waiting period applicable to the coverage of a dependent who-- (A) is a newborn, (B) is an adopted child or child placed for adoption (within the meaning of section 102(b)(3)), at the time of adoption or placement, or (C) is a spouse, at the time of marriage, if the participant has met any waiting period applicable to that participant. (2) Timely enrollment.-- (A) In general.--Enrollment of a participant's beneficiary described in paragraph (1) shall be considered to be timely if a request for enrollment is made within 30 days of the date family coverage is first made available or, in the case described in-- (i) paragraph (1)(A), within 30 days of the date of the birth, (ii) paragraph (1)(B), within 30 days of the date of the adoption or placement for adoption, or (iii) paragraph (1)(C), within 30 days of the date of the marriage with such a beneficiary who is the spouse of the participant, if family coverage is available as of such date. (B) Coverage.--If available coverage includes family coverage and enrollment is made under such coverage on a timely basis under subparagraph (A), the coverage shall become effective not later than the first day of the first month beginning 15 days after the date the completed request for enrollment is received. (e) Multiemployer Plans, Multiple Employer Health Plans, and Multiple Employer Welfare Arrangements.--A group health plan which is a multi-employer plan, a multiple employer health plan (as defined in section 701(4) of the Employee Retirement Income Security Act of 1974), or a multiple employer welfare arrangement (to the extent to which benefits under the arrangement consist of medical care) may not deny an employer whose employees are covered under such a plan or arrangement continued access to the same or different coverage under the terms of such a plan or arrangement, other than-- (1) for nonpayment of contributions, (2) for fraud or other intentional misrepresentation of material fact by the employer, (3) for noncompliance with material plan or arrangement provisions, (4) because the plan or arrangement is ceasing to offer any coverage in a geographic area, (5) for failure to meet the terms of an applicable collective bargaining agreement, to renew a collective bargaining or other agreement requiring or authorizing contributions to the plan, or to employ employees covered by such an agreement, (6) in the case of a plan or arrangement to which subparagraph (C), (D), or (E) of section 3(40) of the Employee Retirement Income Security Act of 1974 applies, to the extent necessary to meet the requirements of such subparagraph, or (7) in the case of a multiple employer health plan (as defined in section 701(4) of such Act), for failure to meet the requirements under part 7 of subtitle B of title I of such Act for exemption under section 514(b)(6)(B) of such Act. SEC. 104. ENFORCEMENT. (a) Enforcement Through COBRA Provisions in Internal Revenue Code.-- (1) Application of cobra sanctions.--Subsection (a) of section 4980B of the Internal Revenue Code of 1986 is amended by striking ``the requirements of'' and all that follows and inserting ``the requirements of-- ``(1) subsection (f) with respect to any qualified beneficiary, or ``(2) subject to subsection (h)-- ``(A) section 101 or 102 of the Health Coverage Availability and Affordability Act of 1996 with respect to any individual covered under the group health plan, or ``(B) section 103 (other than subsection (e)) of such Act with respect to any individual.''. (2) Notice requirement.--Section 4980B(f)(6)(A) of such Code is amended by inserting before the period the following: ``and subtitle A of title I of the Health Coverage Availability and Affordability Act of 1996''. (3) Special rules.--Section 4980B of such Code is amended by adding at the end the following: ``(h) Special Rules.--For purposes of applying this section in the case of requirements described in subsection (a)(2) relating to section 101, section 102, or section 103 (other than subsection (e)) of the Health Coverage Availability and Affordability Act of 1996-- ``(1) In general.-- ``(A) Definition of group health plan.--The term `group health plan' has the meaning given such term in section 191(a) of the Health Coverage Availability and Affordability Act of 1996. ``(B) Qualified beneficiary.--Subsections (b), (c), and (e) shall be applied by substituting the term `individual' for the term `qualified beneficiary' each place it appears. ``(C) Noncompliance period.--Clause (ii) of subsection (b)(2)(B) and the second sentence of subsection (b)(2) shall not apply. ``(D) Limitation on tax.--Subparagraph (B) of subsection (c)(3) shall not apply. ``(E) Liability for tax.--Paragraph (2) of subsection (e) shall not apply. ``(2) Deferral to state regulation.--No tax shall be imposed by this section on any failure to meet the requirements of such section by any entity which offers health insurance coverage and which is an insurer or health maintenance organization (as defined in section 191(c) of the Health Coverage Availability and Affordability Act of 1996) regulated by a State unless the Secretary of Health and Human Services has made the determination described in section 104(c)(2) of such Act with respect to such State, section, and entity. ``(3) Limitation for insured plans.--In the case of a group health plan of a small employer (as defined in section 191 of the Health Coverage Availability and Affordability Act of 1996) that provides health care benefits solely through a contract with an insurer or health maintenance organization (as defined in such section), no tax shall be imposed by this section upon the employer on a failure to meet such requirements if the failure is solely because of the product offered by the insurer or organization under such contract. ``(4) Limitation on imposition of tax.--In no case shall a tax be imposed by this section for a failure to meet such a requirement if-- ``(A) a civil money penalty has been imposed by the Secretary of Labor under part 5 of subtitle A of title I of the Employee Retirement Income Security Act of 1974 with respect to such failure, or ``(B) a civil money penalty has been imposed by the Secretary of Health and Human Services under section 104(c) of the Health Coverage Availability and Affordability Act of 1996 with respect to such failure.''. (b) Enforcement Through ERISA Sanctions for Certain Group Health Plans.-- (1) In general.--Subject to the succeeding provisions of this subsection, sections 101 through 103 of this subtitle (and subtitle D insofar as it is applicable to such sections) shall be deemed to be provisions of title I of the Employee Retirement Income Security [[Page H3049]] Act of 1974 for purposes of applying such title. (2) Federal enforcement only if no enforcement through state.--The Secretary of Labor shall enforce each section referred to in paragraph (1) with respect to any entity which is an insurer or health maintenance organization regulated by a State only if the Secretary of Labor determines that such State has not provided for enforcement of State laws which govern the same matters as are governed by such section and which require compliance by such entity with at least the same requirements as those provided under such section. (3) Limitations on liability.-- (A) No application where failure not discovered exercising reasonable diligence.--No liability shall be imposed under this subsection on the basis of any failure during any period for which it is established to the satisfaction of the Secretary of Labor that none of the persons against whom the liability would be imposed knew, or exercising reasonable diligence would have known, that such failure existed. (B) No application where failure corrected within 30 days.--No liability shall be imposed under this subsection on the basis of any failure if such failure was due to reasonable cause and not to willful neglect, and such failure is corrected during the 30-day period beginning on the first day any of the persons against whom the liability would be imposed knew, or exercising reasonable diligence would have known, that such failure existed. (4) Avoiding duplication of certain penalties.--In no case shall a civil money penalty be imposed under the authority provided under paragraph (1) for a violation of this subtitle for which an excise tax has been imposed under section 4980B of the Internal Revenue Code of 1986 or a civil money penalty imposed under subsection (c). (c) Enforcement Through Civil Money Penalties.-- (1) Imposition.-- (A) In general.--Subject to the succeeding provisions of this subsection, any group health plan, insurer, or organization that fails to meet a requirement of this subtitle (other than section 103(e)) is subject to a civil money penalty under this section. (B) Liability for penalty.--Rules similar to the rules described in section 4980B(e) of the Internal Revenue Code of 1986 for liability for a tax imposed under section 4980B(a) of such Code shall apply to liability for a penalty imposed under subparagraph (A). (C) Amount of penalty.-- (i) In general.--The maximum amount of penalty imposed under this paragraph is $100 for each day for each individual with respect to which such a failure occurs. (ii) Considerations in imposition.--In determining the amount of any penalty to be assessed under this paragraph, the Secretary of Health and Human Services shall take into account the previous record of compliance of the person being assessed with the applicable requirements of this subtitle, the gravity of the violation, and the overall limitations for unintentional failures provided under section 4980B(c)(4) of the Internal Revenue Code of 1986. (iii) Limitations.-- (I) Penalty not to apply where failure not discovered exercising reasonable diligence.--No civil money penalty shall be imposed under this paragraph on any failure during any period for which it is established to the satisfaction of the Secretary that none of the persons against whom the penalty would be imposed knew, or exercising reasonable diligence would have known, that such failure existed. (II) Penalty not to apply to failures corrected within 30 days.--No civil money penalty shall be imposed under this paragraph on any failure if such failure was due to reasonable cause and not to willful neglect, and such failure is corrected during the 30-day period beginning on the first day any of the persons against whom the penalty would be imposed knew, or exercising reasonable diligence would have known, that such failure existed. (D) Administrative review.-- (i) Opportunity for hearing.--The person assessed shall be afforded an opportunity for hearing by the Secretary upon request made within 30 days after the date of the issuance of a notice of assessment. In such hearing the decision shall be made on the record pursuant to section 554 of title 5, United States Code. If no hearing is requested, the assessment shall constitute a final and unappealable order. (ii) Hearing procedure.--If a hearing is requested, the initial agency decision shall be made by an administrative law judge, and such decision shall become the final order unless the Secretary modifies or vacates the decision. Notice of intent to modify or vacate the decision of the administrative law judge shall be issued to the parties within 30 days after the date of the decision of the judge. A final order which takes effect under this paragraph shall be subject to review only as provided under subparagraph (D). (E) Judicial review.-- (i) Filing of action for review.--Any person against whom an order imposing a civil money penalty has been entered after an agency hearing under this paragraph may obtain review by the United States district court for any district in which such person is located or the United States District Court for the District of Columbia by filing a notice of appeal in such court within 30 days from the date of such order, and simultaneously sending a copy of such notice be registered mail to the Secretary. (ii) Certification of administrative record.--The Secretary shall promptly certify and file in such court the record upon which the penalty was imposed. (iii) Standard for review.--The findings of the Secretary shall be set aside only if found to be unsupported by substantial evidence as provided by section 706(2)(E) of title 5, United States Code. (iv) Appeal.--Any final decision, order, or judgment of such district court concerning such review shall be subject to appeal as provided in chapter 83 of title 28 of such Code. (F) Failure to pay assessment; maintenance of action.-- (i) Failure to pay assessment.--If any person fails to pay an assessment after it has become a final and unappealable order, or after the court has entered final judgment in favor of the Secretary, the Secretary shall refer the matter to the Attorney General who shall recover the amount assessed by action in the appropriate United States district court. (ii) Nonreviewability.--In such action the validity and appropriateness of the final order imposing the penalty shall not be subject to review. (G) Payment of penalties.--Except as otherwise provided, penalties collected under this paragraph shall be paid to the Secretary (or other officer) imposing the penalty and shall be available without appropriation and until expended for the purpose of enforcing the provisions with respect to which the penalty was imposed. (2) Federal enforcement only if no enforcement through state.--Paragraph (1) shall apply to enforcement of the requirements of section 101, 102, or 103 (other than section 103(e)) with respect to any entity which offers health insurance coverage and which is an insurer or HMO regulated by a State only if the Secretary of Health and Human Services has determined that such State has not provided for enforcement of State laws which govern the same matters as are governed by such section and which require compliance by such entity with at least the same requirements as those provided under such section. (3) Nonduplication of sanctions.--In no case shall a civil money penalty be imposed under this subsection for a violation of this subtitle for which an excise tax has been imposed under section 4980B of the Internal Revenue Code of 1986 or for which a civil money penalty has been imposed under the authority provided under subsection (b). (d) Coordination in Administration.--The Secretaries of the Treasury, Labor, and Health and Human Services shall issue regulations that are nonduplicative to carry out this subtitle. Such regulations shall be issued in a manner that assures coordination and nonduplication in their activities under this subtitle. Subtitle B--Certain Requirements for Insurers and HMOs in the Group and Individual Markets PART 1--AVAILABILITY OF GROUP HEALTH INSURANCE COVERAGE SEC. 131. GUARANTEED AVAILABILITY OF GENERAL COVERAGE IN THE SMALL GROUP MARKET. (a) Issuance of Coverage.-- (1) In general.--Subject to the succeeding subsections of this section, each insurer or HMO that offers health insurance coverage in the small group market in a State-- (A) must accept every small employer in the State that applies for such coverage; and (B) must accept for enrollment under such coverage every eligible individual (as defined in paragraph (2)) who applies for enrollment during the initial period in which the individual first becomes eligible for coverage under the group health plan and may not place any restriction which is inconsistent with section 103(a) on an individual being a participant or beneficiary so long as such individual is an eligible individual. (2) Eligible individual defined.--In this section, the term ``eligible individual'' means, with respect to an insurer or HMO that offers health insurance coverage to any small employer in the small group market, such an individual in relation to the employer as shall be determined-- (A) in accordance with the terms of such plan, (B) as provided by the insurer or HMO under rules of the insurer or HMO which are uniformly applicable, and (C) in accordance with all applicable State laws governing such insurer or HMO. (b) Special Rules for Network Plans and HMOs.-- (1) In general.--In the case of an insurer that offers health insurance coverage in the small group market through a network plan and in the case of an HMO that offers health insurance coverage in connection with such a plan, the insurer or HMO may-- (A) limit the employers that may apply for such coverage to those with eligible individuals whose place of employment or residence is in the service area for such plan or HMO; (B) limit the individuals who may be enrolled under such coverage to those whose place of residence or employment is within the service area for such plan or HMO; and (C) within the service area of such plan or HMO, deny such coverage to such employers if the insurer or HMO demonstrates that-- (i) it will not have the capacity to deliver services adequately to enrollees of any additional groups because of its obligations to [[Page H3050]] existing group contract holders and enrollees, and (ii) it is applying this paragraph uniformly to all employers without regard to the claims experience of those employers and their employees (and their beneficiaries) or the health status of such employees and beneficiaries. (2) 180-day suspension upon denial of coverage.--An insurer or HMO, upon denying health insurance coverage in any service area in accordance with paragraph (1)(C), may not offer coverage in the small group market within such service area for a period of 180 days after such coverage is denied. (c) Special Rule for Financial Capacity Limits.-- (1) In general.--An insurer or HMO may deny health insurance coverage in the small group market if the insurer or HMO demonstrates to the applicable State authority that-- (A) it does not have the financial reserves necessary to underwrite additional coverage, and (B) it is applying this paragraph uniformly to all employers without regard to the claims experience or duration of coverage of those employers and their employees (and their beneficiaries) or the health status of such employees and beneficiaries. (2) 180-day suspension upon denial of coverage.--An insurer or HMO upon denying health insurance coverage in connection with group health plans in any service area in accordance with paragraph (1) may not offer coverage in connection with group health plans in the small group market within such service area for a period of 180 days after such coverage is denied. (d) Exception to Requirement for Issuance of Coverage by Reason of Failure by Plan To Meet Certain Minimum Participation or Contribution Rules.-- (1) In general.--Subsection (a) shall not apply in the case of any group health plan with respect to which-- (A) participation rules of an insurer or HMO which are described in paragraph (2) are not met, or (B) contribution rules of an insurer or HMO which are described in paragraph (3) are not met. (2) Participation rules.--For purposes of paragraph (1)(A), participation rules (if any) of an insurer or HMO shall be treated as met with respect to a group health plan only if such rules are uniformly applicable and in accordance with applicable State law and the number or percentage of eligible individuals who, under the plan, are participants or beneficiaries equals or exceeds a level which is determined in accordance with such rules. (3) Contribution rules.--For purposes of paragraph (1)(B), contribution rules (if any) of an insurer or HMO shall be treated as met with respect to a group health plan only if such rules are in accordance with applicable State law. SEC. 132. GUARANTEED RENEWABILITY OF GROUP COVERAGE. (a) In General.--Except as provided in this section, if an insurer or health maintenance organization offers health insurance coverage in the small or large group market, the insurer or organization must renew or continue in force such coverage at the option of the employer. (b) General Exceptions.--An insurer or organization may nonrenew or discontinue health insurance coverage offered an employer based only on one or more of the following: (1) Nonpayment of premiums.--The employer has failed to pay premiums or contributions in accordance with the terms of the health insurance coverage or the insurer or organization has not received timely premium payments. (2) Fraud.--The employer has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of the coverage. (3) Violation with participation or contribution rules.-- The employer has failed to comply with a material plan provision relating to participation or contribution rules in accordance with section 131(d). (4) Termination of plan.--Subject to subsection (c), the insurer or organization is ceasing to offer coverage in the small or large group market in a State (or, in the case of a network plan or HMO, in a geographic area). (5) Movement outside service area.--The employer has changed the place of employment in such manner that employees and dependents reside and are employed outside the service area of the insurer or organization or outside the area for which the insurer or organization is authorized to do business. Paragraph (5) shall apply to an insurer or HMO only if it is applied uniformly without regard to the claims experience of employers and their employees (and their beneficiaries) or the health status of such employees and beneficiaries. (c) Exceptions for Uniform Termination of Coverage.-- (1) Particular type of coverage not offered.--In any case in which a insurer or HMO decides to discontinue offering a particular type of health insurance coverage in the small or large group market, coverage of such type may be discontinued by the insurer or organization only if-- (A) the insurer or organization provides notice to each employer provided coverage of this type in such market (and participants and beneficiaries covered under such coverage) of such discontinuation at least 90 days prior to the date of the discontinuation of such coverage; (B) the insurer or organization offers to each employer in the small employer or large employer market provided coverage of this type, the option to purchase any other health insurance coverage currently being offered by the insurer or organization for employers in such market; and (C) in exercising the option to discontinue coverage of this type and in offering one or more replacement coverage, the insurer or organization acts uniformly without regard to the health status or insurability of participants or beneficiaries covered or new participants or beneficiaries who may become eligible for such coverage. (2) Discontinuance of all coverage.-- (A) In general.--Subject to subparagraph (C), in any case in which an insurer or HMO elects to discontinue offering all health insurance coverage in the small group market or the large group market, or both markets, in a State, health insurance coverage may be discontinued by the insurer or organization only if-- (i) the insurer or organization provides notice to the applicable State authority and to each employer (and participants and beneficiaries covered under such coverage) of such discontinuation at least 180 days prior to the date of the expiration of such coverage, and (ii) all health insurance issued or delivered for issuance in the State in such market (or markets) are discontinued and coverage under such health insurance coverage in such market (or markets) is not renewed. (B) Prohibition on market reentry.--In the case of a discontinuation under subparagraph (A) in one or both markets, the insurer or organization may not provide for the issuance of any health insurance coverage in the market and State involved during the 5-year period beginning on the date of the discontinuation of the last health insurance coverage not so renewed. (d) Exception for Uniform Modification of Coverage.--At the time of coverage renewal, an insurer or HMO may modify the coverage offered to a group health plan in the group health market so long as such modification is effective on a uniform basis among group health plans with that type of coverage. PART 2--AVAILABILITY OF INDIVIDUAL HEALTH INSURANCE COVERAGE SEC. 141. GUARANTEED AVAILABILITY OF INDIVIDUAL HEALTH INSURANCE COVERAGE TO CERTAIN INDIVIDUALS WITH PRIOR GROUP COVERAGE. (a) Goals.--The goals of this section are-- (1) to guarantee that any qualifying individual (as defined in subsection (b)(1)) is able to obtain qualifying coverage (as defined in subsection (b)(2)); and (2) to assure that qualifying individuals obtaining such coverage receive credit for their prior coverage toward the new coverage's preexisting condition exclusion period (if any) in a manner consistent with subsection (b)(3). (b) Qualifying Individual and Health Insurance Coverage Defined.--In this section-- (1) Qualifying individual.--The term ``qualifying individual'' means an individual-- (A)(i) for whom, as of the date on which the individual seeks coverage under this section, the aggregate of the qualified coverage periods (as defined in section 101(b)(3)(B)) is 18 or more months and (ii) whose most recent prior coverage was under a group health plan, governmental plan, or church plan (or health insurance coverage offered in connection with any such plan); (B) who is not eligible for coverage under (i) a group health plan, (ii) part A or part B of title XVIII of the Social Security Act, or (iii) a State plan under title XIX of such Act (or any successor program), and does not have individual health insurance coverage; (C) with respect to whom the most recent coverage within the coverage period described in subparagraph (A)(i) was not terminated based on a factor described in paragraph (1) or (2) of section 132(b); (D) if the individual had been offered the option of continuation coverage under a COBRA continuation provision or under a similar State program, who elected such coverage; and (E) who, if the individual elected such continuation coverage, has exhausted such continuation coverage. In applying subparagraph (A)(i), the reference in section 101(b)(3)(B)(ii) to a 60-day break in coverage is deemed a reference to a 60-day break in any coverage described in section 101(b)(3)(B)(i). (2) Qualifying coverage.-- (A) In general.--The term ``qualifying coverage'' means, with respect to an insurer or HMO in relation to an qualifying individual, individual health insurance coverage for which the actuarial value of the benefits is not less than-- (i) the weighted average actuarial value of the benefits provided by all the individual health insurance coverage issued by the insurer or HMO in the State during the previous year (not including coverage issued under this section), or (ii) the weighted average of the actuarial value of the benefits provided by all the individual health insurance coverage issued by all insurers and HMOs in the State during the previous year (not including coverage issued under this section), [[Page H3051]] as elected by the plan or by the State under subsection (c)(1). (B) Assumptions.--For purposes of subparagraph (A), the actuarial value of benefits provided under individual health insurance coverage shall be calculated based on a standardized population and a set of standardized utilization and cost factors. (3) Crediting for previous coverage.--Crediting is consistent with this paragraph only if any preexisting condition exclusion period is reduced at least to the extent such a period would be reduced if the coverage under this section were under a group health plan to which section 101(a) applies. In carrying out this subsection, provisions similar to the provisions of section 101(c) shall apply. (c) Optional State Establishment of Mechanisms To Achieve Goals of Guaranteeing Availability of Coverage.-- (1) In general.--Any State may establish, to the extent of the State's authority, public or private mechanisms reasonably designed to meet the goals specified in subsection (a). If a State implements such a mechanism by the deadline specified in paragraph (4), the State may elect to have such mechanisms apply instead of having subsection (d)(3) apply in the State. An election under this paragraph shall be by notice from the chief executive officer of the State to the Secretary of Health and Human Services on a timely basis consistent with the deadlines specified in paragraph (4). In establishing what is qualifying coverage under such a mechanism under this subsection, a State may exercise the election described in subsection (b)(2)(A) with respect to each insurer or HMO in the State (or on a collective basis after exercising such election for each such insurer or HMO). (2) Types of mechanisms.--State mechanisms under this subsection may include one or more (or a combination) of the following: (A) Health insurance coverage pools or programs authorized or established by the State. (B) Mandatory group conversion policies. (C) Guaranteed issue of one or more plans of individual health insurance coverage to qualifying individuals. (D) Open enrollment by one or more insurers or HMOs. The mechanisms described in the previous sentence are not an exclusive list of the mechanisms (or combinations of mechanisms) that may be used under this subsection. (3) Safe harbor for benefits under current risk pools.--In the case of a State that has a health insurance coverage pool or risk pool in effect on March 12, 1996, and that implements the mechanism described in paragraph (2)(A), the benefits under such mechanism (or benefits the actuarial value of which is not less than the actuarial value of such current benefits, using the assumptions described in subsection (b)(2)(B)) are deemed, for purposes of this section, to constitute qualified coverage. (4) Deadline for state implementation.-- (A) In general.--Subject to subparagraph (B), the deadline under this paragraph is July 1, 1997. (B) Extension to permit legislation.--The deadline under this paragraph is July 1, 1998, in the case of a State the legislature of which does not have a regular legislative session at any time between January 1, 1997, and June 30, 1997. (C) Construction.--Nothing in this section shall be construed as preventing a State from-- (i) implementing guaranteed availability mechanisms before the deadline, (ii) continuing in effect mechanisms that are in effect before the date of the enactment of this Act, (iii) offering guaranteed availability of coverage that is not qualifying coverage, or (iv) offering guaranteed availability of coverage to individuals who are not qualifying individuals. (d) Fallback Provisions.-- (1) No state election.--If a State has not provided notice to the Secretary of an election on a timely basis under subsection (c), the Secretary shall notify the State that paragraph (3) will be applied in the State. (2) Preliminary determination after state election.--If-- (A) a State has provided notice of an election on a timely basis under subsection (c), and (B) the Secretary finds, after consultation with the chief executive officer of the State and the insurance commissioner or chief insurance regulatory official of the State, that such a mechanism (for which notice was provided) is not reasonably designed to meet the goals specified in subsection (a), the Secretary shall notify the State of such preliminary determination, of the consequences under paragraph (3) of a failure to implement such a mechanism, and permit the State a reasonable opportunity in which to modify the mechanism (or to adopt another mechanism) that is reasonably designed to meet the goals specified in subsection (a). The Secretary shall not make such a determination on any basis other than the basis described in subparagraph (B). If, after providing such notice and opportunity, the Secretary finds that the State has not implemented such a mechanism, the Secretary shall notify the State that paragraph (3) will be applied in the State. (3) Description of fallback mechanism.--As provided under paragraphs (1) and (2) and subject to paragraph (5), each insurer or HMO in the State involved that issues individual health insurance coverage-- (A) shall offer qualifying health insurance coverage, in which qualifying individuals obtaining such coverage receive credit for their prior coverage toward the new coverage's preexisting condition exclusion period (if any) in a manner consistent with subsection (b)(3), to each qualifyin

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All articles in House section

HEALTH COVERAGE AVAILABILITY AND AFFORDABILITY ACT OF 1996
(House of Representatives - March 28, 1996)

Text of this article available as: TXT PDF [Pages H3045-H3147] {time} 1815 HEALTH COVERAGE AVAILABILITY AND AFFORDABILITY ACT OF 1996 Mr. ARCHER. Mr. Speaker, pursuant to House Resolution 392, I call up the bill (H.R. 3103), to amend the Internal Revenue Code of 1986 to improve portability and continuity of health insurance coverage in the group and individual markets, to combat waste, fraud, and abuse in health insurance and health care delivery, to promote the use of medical savings accounts, to improve access to long-term care services and coverage, to simplify the administration of health insurance, and for other purposes, and ask for its immediate consideration in the House. The Clerk read the title of the bill. The SPEAKER pro tempore (Mr. Combest). Pursuant to House Resolution 392, the amendment in the nature of a substitute consisting of the text of H.R. 3160 modified by the amendment specified in part 1 of House Report 104-501 is adopted. The text of H.R. 3103 consisting of the text of H.R. 3160, as modified, is as follows: H.R. 3160 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) Short Title.--This Act may be cited as the ``Health Coverage Availability and Affordability Act of 1996''. (b) Table of Contents.--The table of contents of this Act is as follows: Sec. 1. Short title; table of contents. TITLE I--IMPROVED AVAILABILITY AND PORTABILITY OF HEALTH INSURANCE COVERAGE Subtitle A--Coverage Under Group Health Plans Sec. 101. Portability of coverage for previously covered individuals. Sec. 102. Limitation on preexisting condition exclusions; no application to certain newborns, adopted children, and pregnancy. Sec. 103. Prohibiting exclusions based on health status and providing for enrollment periods. Sec. 104. Enforcement. Subtitle B--Certain Requirements for Insurers and HMOs in the Group and Individual Markets Part 1--Availability of Group Health Insurance Coverage Sec. 131. Guaranteed availability of general coverage in the small group market. Sec. 132. Guaranteed renewability of group coverage. [[Page H3046]] Part 2--Availability of Individual Health Insurance Coverage Sec. 141. Guaranteed availability of individual health insurance coverage to certain individuals with prior group coverage. Sec. 142. Guaranteed renewability of individual health insurance coverage. Part 3--Enforcement Sec. 151. Incorporation of provisions for State enforcement with Federal fallback authority. Subtitle C--Affordable and Available Health Coverage Through Multiple Employer Pooling Arrangements Sec. 161. Clarification of duty of the Secretary of Labor to implement provisions of current law providing for exemptions and solvency standards for multiple employer health plans. ``Part 7--Rules Governing Regulation of Multiple Employer Health Plans ``Sec. 701. Definitions. ``Sec. 702. Clarification of duty of the Secretary to implement provisions of current law providing for exemptions and solvency standards for multiple employer health plans. ``Sec. 703. Requirements relating to sponsors, boards of trustees, and plan operations. ``Sec. 704. Other requirements for exemption. ``Sec. 705. Maintenance of reserves. ``Sec. 706. Notice requirements for voluntary termination. ``Sec. 707. Corrective actions and mandatory termination. ``Sec. 708. Additional rules regarding State authority.''. Sec. 162. Affordable and available fully insured health coverage through voluntary health insurance associations. Sec. 163. State authority fully applicable to self-insured multiple employer welfare arrangements providing medical care which are not exempted under new part 7. Sec. 164. Clarification of treatment of single employer arrangements. Sec. 165. Clarification of treatment of certain collectively bargained arrangements. Sec. 166. Treatment of church plans. Sec. 167. Enforcement provisions relating to multiple employer welfare arrangements. Sec. 168. Cooperation between Federal and State authorities. Sec. 169. Filing and disclosure requirements for multiple employer welfare arrangements offering health benefits. Sec. 170. Single annual filing for all participating employers. Sec. 171. Effective date; transitional rule. Subtitle D--Definitions; General Provisions Sec. 191. Definitions; scope of coverage. Sec. 192. State flexibility to provide greater protection. Sec. 193. Effective date. Sec. 194. Rule of construction. Sec. 195. Findings relating to exercise of commerce clause authority. TITLE II--PREVENTING HEALTH CARE FRAUD AND ABUSE; ADMINISTRATIVE SIMPLIFICATION; MEDICAL LIABILITY REFORM Sec. 200. References in title. Subtitle A--Fraud and Abuse Control Program Sec. 201. Fraud and abuse control program. Sec. 202. Medicare integrity program. Sec. 203. Beneficiary incentive programs. Sec. 204. Application of certain health anti-fraud and abuse sanctions to fraud and abuse against Federal health care programs. Sec. 205. Guidance regarding application of health care fraud and abuse sanctions. Subtitle B--Revisions to Current Sanctions for Fraud and Abuse Sec. 211. Mandatory exclusion from participation in medicare and State health care programs. Sec. 212. Establishment of minimum period of exclusion for certain individuals and entities subject to permissive exclusion from medicare and State health care programs. Sec. 213. Permissive exclusion of individuals with ownership or control interest in sanctioned entities. Sec. 214. Sanctions against practitioners and persons for failure to comply with statutory obligations. Sec. 215. Intermediate sanctions for medicare health maintenance organizations. Sec. 216. Additional exception to anti-kickback penalties for discounting and managed care arrangements. Sec. 217. Criminal penalty for fraudulent disposition of assets in order to obtain medicaid benefits. Sec. 218. Effective date. Subtitle C--Data Collection Sec. 221. Establishment of the health care fraud and abuse data collection program. Subtitle D--Civil Monetary Penalties Sec. 231. Social security act civil monetary penalties. Sec. 232. Clarification of level of intent required for imposition of sanctions. Sec. 233. Penalty for false certification for home health services. Subtitle E--Revisions to Criminal Law Sec. 241. Definitions relating to Federal health care offense. Sec. 242. Health care fraud. Sec. 243. Theft or embezzlement. Sec. 244. False statements. Sec. 245. Obstruction of criminal investigations of health care offenses. Sec. 246. Laundering of monetary instruments. Sec. 247. Injunctive relief relating to health care offenses. Sec. 248. Authorized investigative demand procedures. Sec. 249. Forfeitures for Federal health care offenses. Sec. 250. Relation to ERISA authority. Subtitle F--Administrative Simplification Sec. 251. Purpose. Sec. 252. Administrative simplification. ``Part C--Administrative Simplification ``Sec. 1171. Definitions. ``Sec. 1172. General requirements for adoption of standards. ``Sec. 1173. Standards for information transactions and data elements. ``Sec. 1174. Timetables for adoption of standards. ``Sec. 1175. Requirements. ``Sec. 1176. General penalty for failure to comply with requirements and standards. ``Sec. 1177. Wrongful disclosure of individually identifiable health information. ``Sec. 1178. Effect on State law. Sec. 253. Changes in membership and duties of National Committee on Vital and Health Statistics. Subtitle G--Duplication and Coordination of Medicare-Related Plans Sec. 261. Duplication and coordination of medicare-related plans. Subtitle H--Medical Liability Reform Part 1--General Provisions Sec. 271. Federal reform of health care liability actions. Sec. 272. Definitions. Sec. 273. Effective date. Part 2--Uniform Standards for Health Care Liability Actions Sec. 281. Statute of limitations. Sec. 282. Calculation and payment of damages. Sec. 283. Alternative dispute resolution. TITLE III--TAX-RELATED HEALTH PROVISIONS Sec. 300. Amendment of 1986 code. Subtitle A--Medical Savings Accounts Sec. 301. Medical savings accounts. Subtitle B--Increase in Deduction for Health Insurance Costs of Self- Employed Individuals Sec. 311. Increase in deduction for health insurance costs of self- employed individuals. Subtitle C--Long-Term Care Services and Contracts Part I--General Provisions Sec. 321. Treatment of long-term care insurance. Sec. 322. Qualified long-term care services treated as medical care. Sec. 323. Reporting requirements. Part II--Consumer Protection Provisions Sec. 325. Policy requirements. Sec. 326. Requirements for issuers of long-term care insurance policies. Sec. 327. Coordination with State requirements. Sec. 328. Effective dates. Subtitle D--Treatment of Accelerated Death Benefits Sec. 331. Treatment of accelerated death benefits by recipient. Sec. 332. Tax treatment of companies issuing qualified accelerated death benefit riders. Subtitle E--High-Risk Pools Sec. 341. Exemption from income tax for State-sponsored organizations providing health coverage for high-risk individuals. Subtitle F--Organizations Subject to Section 833 Sec. 351. Organizations subject to section 833. TITLE IV--REVENUE OFFSETS Sec. 400. Amendment of 1986 Code. Subtitle A--Repeal of Bad Debt Reserve Method for Thrift Savings Associations Sec. 401. Repeal of bad debt reserve method for thrift savings associations. Subtitle B--Reform of the Earned Income Credit Sec. 411. Earned income credit denied to individuals not authorized to be employed in the United States. Subtitle C--Treatment of Individuals Who Lose United States Citizenship Sec. 421. Revision of income, estate, and gift taxes on individuals who lose United States citizenship. Sec. 422. Information on individuals losing United States citizenship. Sec. 423. Report on tax compliance by United States citizens and residents living abroad. [[Page H3047]] TITLE I--IMPROVED AVAILABILITY AND PORTABILITY OF HEALTH INSURANCE COVERAGE Subtitle A--Coverage Under Group Health Plans SEC. 101. PORTABILITY OF COVERAGE FOR PREVIOUSLY COVERED INDIVIDUALS. (a) Crediting Periods of Previous Coverage Toward Preexisting Condition Restrictions.--Subject to the succeeding provisions of this section, a group health plan, and an insurer or health maintenance organization offering health insurance coverage in connection with a group health plan, shall provide that any preexisting condition limitation period (as defined in subsection (b)(2)) is reduced by the length of the aggregate period of qualified prior coverage (if any, as defined in subsection (b)(3)) applicable to the participant or beneficiary as of the date of commencement of coverage under the plan. (b) Definitions and Other Provisions Relating to Preexisting Conditions.-- (1) Preexisting condition.-- (A) In general.--For purposes of this subtitle, subject to subparagraph (B), the term ``preexisting condition'' means a condition, regardless of the cause of the condition, for which medical advice, diagnosis, care, or treatment was recommended or received within the 6-month period ending on the day before-- (i) the effective date of the coverage of such participant or beneficiary, or (ii) the earliest date upon which such coverage could have been effective if there were no waiting period applicable, whichever is earlier. (B) Treatment of genetic information.--For purposes of this section, genetic information shall not be considered to be a preexisting condition, so long as treatment of the condition to which the information is applicable has not been sought during the 6-month period described in subparagraph (A). (2) Preexisting condition limitation period.--For purposes of this subtitle, the term ``preexisting condition limitation period'' means, with respect to coverage of an individual under a group health plan or under health insurance coverage, the period during which benefits with respect to treatment of a condition of such individual are not provided based on the fact that the condition is a preexisting condition. (3) Aggregate period of qualified prior coverage.-- (A) In general.--For purposes of this section, the term ``aggregate period of qualified prior coverage'' means, with respect to commencement of coverage of an individual under a group health plan or health insurance coverage offered in connection with a group health plan, the aggregate of the qualified coverage periods (as defined in subparagraph (B)) of such individual occurring before the date of such commencement. Such period shall be treated as zero if there is more than a 60-day break in coverage under a group health plan (or health insurance coverage offered in connection with such a plan) between the date the most recent qualified coverage period ends and the date of such commencement. (B) Qualified coverage period.-- (i) In general.--For purposes of this paragraph, subject to subsection (c), the term ``qualified coverage period'' means, with respect to an individual, any period of coverage of the individual under a group health plan, health insurance coverage, under title XVIII or XIX of the Social Security Act, coverage under the TRICARE program under chapter 55 of title 10, United States Code, a program of the Indian Health Service, and State health insurance coverage or risk pool, and includes coverage under a health plan offered under chapter 89 of title 5, United States Code. (ii) Disregarding periods before breaks in coverage.--Such term does not include any period occurring before any 60-day break in coverage described in subparagraph (A). (C) Waiting period not treated as a break in coverage.--For purposes of subparagraphs (A) and (B), any period that is in a waiting period for any coverage under a group health plan (or for health insurance coverage offered in connection with a group health plan) shall not be considered to be a break in coverage described in subparagraph (B)(ii). (D) Establishment of period.--A qualified coverage period with respect to an individual shall be established through presentation of certifications described in subsection (c) or in such other manner as may be specified in regulations to carry out this title. (c) Certifications of Coverage; Conforming Coverage.-- (1) In general.--The plan administrator of a group health plan, or the insurer or HMO offering health insurance coverage in connection with a group health plan, shall, on request made on behalf of an individual covered (or previously covered within the previous 18 months) under the plan or coverage, provide for a certification of the period of coverage of the individual under such plan or coverage and of the waiting period (if any) imposed with respect to the individual for any coverage under the plan. (2) Standard method.--Subject to paragraph (3), a group health plan, or insurer or HMO offering health insurance coverage in connection with a group health plan, shall determine qualified coverage periods under subsection (b)(3)(B) by including all periods described in such subsection, without regard to the specific benefits offered during such a period. (3) Alternative method.--Such a plan, insurer, or HMO may elect to make such determination on a benefit-specific basis for all participants and beneficiaries and not to include as a qualified coverage period with respect to a specific benefit coverage during a previous period unless such previous coverage for that benefit was included at the end of the most recent period of coverage. In the case of such an election-- (A) the plan, insurer, or HMO shall prominently state in any disclosure statements concerning the plan or coverage and to each enrollee at the time of enrollment under the plan (or at the time the health insurance coverage is offered for sale in the group health market) that the plan or coverage has made such election and shall include a description of the effect of this election; and (B) upon the request of the plan, insurer, or HMO, the entity providing a certification under paragraph (1)-- (i) shall promptly disclose to the requesting plan, insurer, or HMO the plan statement (insofar as it relates to health benefits under the plan) or other detailed benefit information on the benefits available under the previous plan or coverage, and (ii) may charge for the reasonable cost of providing such information. SEC. 102. LIMITATION ON PREEXISTING CONDITION EXCLUSIONS; NO APPLICATION TO CERTAIN NEWBORNS, ADOPTED CHILDREN, AND PREGNANCY. (a) Limitation of Period.-- (1) In general.--Subject to the succeeding provisions of this section, a group health plan, and an insurer or HMO offering health insurance coverage in connection with a group health plan, shall provide that any preexisting condition limitation period (as defined in section 101(b)(2)) does not exceed 12 months, counting from the effective date of coverage. (2) Extension of period in the case of late enrollment.--In the case of a participant or beneficiary whose initial coverage commences after the date the participant or beneficiary first becomes eligible for coverage under the group health plan, the reference in paragraph (1) to ``12 months'' is deemed a reference to ``18 months''. (b) Exclusion Not Applicable to Certain Newborns and Certain Adoptions.-- (1) In general.--Subject to paragraph (2), a group health plan, and an insurer or HMO offering health insurance coverage in connection with a group health plan, may not provide any limitation on benefits based on the existence of a preexisting condition in the case of-- (A) an individual who within the 30-day period beginning with the date of birth, or (B) an adopted child or a child placed for adoption beginning at the time of adoption or placement if the individual, within the 30-day period beginning on the date of adoption or placement, becomes covered under a group health plan or otherwise becomes covered under health insurance coverage (or covered for medical assistance under title XIX of the Social Security Act). (2) Loss if break in coverage.--Paragraph (1) shall no longer apply to an individual if the individual does not have any coverage described in section 101(b)(3)(B)(i) for a continuous period of 60 days, not counting in such period any days that are in a waiting period for any coverage under a group health plan. (3) Placed for adoption defined.--In this subsection and section 103(e), the term ``placement'', or being ``placed'', for adoption, in connection with any placement for adoption of a child with any person, means the assumption and retention by such person of a legal obligation for total or partial support of such child in anticipation of adoption of such child. The child's placement with such person terminates upon the termination of such legal obligation. (c) Exclusion Not Applicable to Pregnancy.--For purposes of this section, pregnancy shall not be treated as a preexisting condition. (d) Eligibility Period Imposed by Health Maintenance Organizations as Alternative to Preexisting Condition Limitation.--A health maintenance organization which offers health insurance coverage in connection with a group health plan and which does not use the preexisting condition limitations allowed under this section and section 101 with respect to any particular coverage option may impose an eligibility period for such coverage option, but only if such period does not exceed-- (1) 60 days, in the case of a participant or beneficiary whose initial coverage commences at the time such participant or beneficiary first becomes eligible for coverage under the plan, or (2) 90 days, in the case of a participant or beneficiary whose initial coverage commences after the date on which such participant or beneficiary first becomes eligible for coverage. Such an HMO may use alternative methods, from those described in the previous sentence, to address adverse selection as approved by the applicable State authority. For purposes of this subsection, the term ``eligibility period'' means a period which, under the terms of the health insurance coverage offered by the health maintenance organization, must expire before the health insurance coverage becomes effective. Any such eligibility period shall be treated for purposes of this subtitle as a waiting period under the plan and shall run concurrently [[Page H3048]] with any other applicable waiting period under the plan. SEC. 103. PROHIBITING EXCLUSIONS BASED ON HEALTH STATUS AND PROVIDING FOR ENROLLMENT PERIODS. (a) Prohibition of Exclusion of Participants or Beneficiaries Based on Health Status.-- (1) In general.--A group health plan, and an insurer or HMO offering health insurance coverage in connection with a group health plan, may not exclude an employee or his or her beneficiary from being (or continuing to be) enrolled as a participant or beneficiary under the terms of such plan or coverage based on health status (as defined in section 191(c)(6)). (2) Construction.--Nothing in this subsection shall be construed as preventing the establishment of preexisting condition limitations and restrictions to the extent consistent with the provisions of this subtitle. (b) Prohibition of Discrimination in Premium Contributions of Individual Participants or Beneficiaries Based on Health Status.-- (1) In general.--A group health plan, and an insurer or HMO offering health insurance coverage in connection with a group health plan, may not require a participant or beneficiary to pay a premium or contribution which is greater than such premium or contribution for a similarly situated participant or beneficiary solely on the basis of the health status of the participant or beneficiary. (2) Construction.--Nothing in this subsection is intended-- (A) to effect the premium rates an insurer or HMO may charge an employer for health insurance coverage provided in connection a group health plan, (B) to prevent a group health plan (or insurer or HMO in health insurance coverage offered in connection with such a plan) from establishing premium discounts or modifying otherwise applicable copayments or deductibles in return for adherence to programs of health promotion and disease prevention, or (C) to prevent such a plan, insurer, or HMO from varying the premiums or contributions required of participants or beneficiaries based on factors (such as scope of benefits, geographic area of residence, or wage levels) that are not directly related to health status. (c) Enrollment of Eligible Individuals Who Lose Other Coverage.--A group health plan shall permit an uncovered employee who is otherwise eligible for coverage under the terms of the plan (or an uncovered dependent, as defined under the terms of the plan, of such an employee, if family coverage is available) to enroll for coverage under the plan under at least one benefit option if each of the following conditions is met: (1) The employee or dependent was covered under a group health plan or had health insurance coverage at the time coverage was previously offered to the employee or individual. (2) The employee stated in writing at such time that coverage under a group health plan or health insurance coverage was the reason for declining enrollment. (3) The employee or dependent lost coverage under a group health plan or health insurance coverage (as a result of loss of eligibility for the coverage, termination of employment, or reduction in the number of hours of employment). (4) The employee requests such enrollment within 30 days after the date of termination of such coverage. (d) Dependent Beneficiaries.-- (1) In general.--If a group health plan makes family coverage available, the plan may not require, as a condition of coverage of an individual as a dependent (as defined under the terms of the plan) of a participant in the plan, a waiting period applicable to the coverage of a dependent who-- (A) is a newborn, (B) is an adopted child or child placed for adoption (within the meaning of section 102(b)(3)), at the time of adoption or placement, or (C) is a spouse, at the time of marriage, if the participant has met any waiting period applicable to that participant. (2) Timely enrollment.-- (A) In general.--Enrollment of a participant's beneficiary described in paragraph (1) shall be considered to be timely if a request for enrollment is made within 30 days of the date family coverage is first made available or, in the case described in-- (i) paragraph (1)(A), within 30 days of the date of the birth, (ii) paragraph (1)(B), within 30 days of the date of the adoption or placement for adoption, or (iii) paragraph (1)(C), within 30 days of the date of the marriage with such a beneficiary who is the spouse of the participant, if family coverage is available as of such date. (B) Coverage.--If available coverage includes family coverage and enrollment is made under such coverage on a timely basis under subparagraph (A), the coverage shall become effective not later than the first day of the first month beginning 15 days after the date the completed request for enrollment is received. (e) Multiemployer Plans, Multiple Employer Health Plans, and Multiple Employer Welfare Arrangements.--A group health plan which is a multi-employer plan, a multiple employer health plan (as defined in section 701(4) of the Employee Retirement Income Security Act of 1974), or a multiple employer welfare arrangement (to the extent to which benefits under the arrangement consist of medical care) may not deny an employer whose employees are covered under such a plan or arrangement continued access to the same or different coverage under the terms of such a plan or arrangement, other than-- (1) for nonpayment of contributions, (2) for fraud or other intentional misrepresentation of material fact by the employer, (3) for noncompliance with material plan or arrangement provisions, (4) because the plan or arrangement is ceasing to offer any coverage in a geographic area, (5) for failure to meet the terms of an applicable collective bargaining agreement, to renew a collective bargaining or other agreement requiring or authorizing contributions to the plan, or to employ employees covered by such an agreement, (6) in the case of a plan or arrangement to which subparagraph (C), (D), or (E) of section 3(40) of the Employee Retirement Income Security Act of 1974 applies, to the extent necessary to meet the requirements of such subparagraph, or (7) in the case of a multiple employer health plan (as defined in section 701(4) of such Act), for failure to meet the requirements under part 7 of subtitle B of title I of such Act for exemption under section 514(b)(6)(B) of such Act. SEC. 104. ENFORCEMENT. (a) Enforcement Through COBRA Provisions in Internal Revenue Code.-- (1) Application of cobra sanctions.--Subsection (a) of section 4980B of the Internal Revenue Code of 1986 is amended by striking ``the requirements of'' and all that follows and inserting ``the requirements of-- ``(1) subsection (f) with respect to any qualified beneficiary, or ``(2) subject to subsection (h)-- ``(A) section 101 or 102 of the Health Coverage Availability and Affordability Act of 1996 with respect to any individual covered under the group health plan, or ``(B) section 103 (other than subsection (e)) of such Act with respect to any individual.''. (2) Notice requirement.--Section 4980B(f)(6)(A) of such Code is amended by inserting before the period the following: ``and subtitle A of title I of the Health Coverage Availability and Affordability Act of 1996''. (3) Special rules.--Section 4980B of such Code is amended by adding at the end the following: ``(h) Special Rules.--For purposes of applying this section in the case of requirements described in subsection (a)(2) relating to section 101, section 102, or section 103 (other than subsection (e)) of the Health Coverage Availability and Affordability Act of 1996-- ``(1) In general.-- ``(A) Definition of group health plan.--The term `group health plan' has the meaning given such term in section 191(a) of the Health Coverage Availability and Affordability Act of 1996. ``(B) Qualified beneficiary.--Subsections (b), (c), and (e) shall be applied by substituting the term `individual' for the term `qualified beneficiary' each place it appears. ``(C) Noncompliance period.--Clause (ii) of subsection (b)(2)(B) and the second sentence of subsection (b)(2) shall not apply. ``(D) Limitation on tax.--Subparagraph (B) of subsection (c)(3) shall not apply. ``(E) Liability for tax.--Paragraph (2) of subsection (e) shall not apply. ``(2) Deferral to state regulation.--No tax shall be imposed by this section on any failure to meet the requirements of such section by any entity which offers health insurance coverage and which is an insurer or health maintenance organization (as defined in section 191(c) of the Health Coverage Availability and Affordability Act of 1996) regulated by a State unless the Secretary of Health and Human Services has made the determination described in section 104(c)(2) of such Act with respect to such State, section, and entity. ``(3) Limitation for insured plans.--In the case of a group health plan of a small employer (as defined in section 191 of the Health Coverage Availability and Affordability Act of 1996) that provides health care benefits solely through a contract with an insurer or health maintenance organization (as defined in such section), no tax shall be imposed by this section upon the employer on a failure to meet such requirements if the failure is solely because of the product offered by the insurer or organization under such contract. ``(4) Limitation on imposition of tax.--In no case shall a tax be imposed by this section for a failure to meet such a requirement if-- ``(A) a civil money penalty has been imposed by the Secretary of Labor under part 5 of subtitle A of title I of the Employee Retirement Income Security Act of 1974 with respect to such failure, or ``(B) a civil money penalty has been imposed by the Secretary of Health and Human Services under section 104(c) of the Health Coverage Availability and Affordability Act of 1996 with respect to such failure.''. (b) Enforcement Through ERISA Sanctions for Certain Group Health Plans.-- (1) In general.--Subject to the succeeding provisions of this subsection, sections 101 through 103 of this subtitle (and subtitle D insofar as it is applicable to such sections) shall be deemed to be provisions of title I of the Employee Retirement Income Security [[Page H3049]] Act of 1974 for purposes of applying such title. (2) Federal enforcement only if no enforcement through state.--The Secretary of Labor shall enforce each section referred to in paragraph (1) with respect to any entity which is an insurer or health maintenance organization regulated by a State only if the Secretary of Labor determines that such State has not provided for enforcement of State laws which govern the same matters as are governed by such section and which require compliance by such entity with at least the same requirements as those provided under such section. (3) Limitations on liability.-- (A) No application where failure not discovered exercising reasonable diligence.--No liability shall be imposed under this subsection on the basis of any failure during any period for which it is established to the satisfaction of the Secretary of Labor that none of the persons against whom the liability would be imposed knew, or exercising reasonable diligence would have known, that such failure existed. (B) No application where failure corrected within 30 days.--No liability shall be imposed under this subsection on the basis of any failure if such failure was due to reasonable cause and not to willful neglect, and such failure is corrected during the 30-day period beginning on the first day any of the persons against whom the liability would be imposed knew, or exercising reasonable diligence would have known, that such failure existed. (4) Avoiding duplication of certain penalties.--In no case shall a civil money penalty be imposed under the authority provided under paragraph (1) for a violation of this subtitle for which an excise tax has been imposed under section 4980B of the Internal Revenue Code of 1986 or a civil money penalty imposed under subsection (c). (c) Enforcement Through Civil Money Penalties.-- (1) Imposition.-- (A) In general.--Subject to the succeeding provisions of this subsection, any group health plan, insurer, or organization that fails to meet a requirement of this subtitle (other than section 103(e)) is subject to a civil money penalty under this section. (B) Liability for penalty.--Rules similar to the rules described in section 4980B(e) of the Internal Revenue Code of 1986 for liability for a tax imposed under section 4980B(a) of such Code shall apply to liability for a penalty imposed under subparagraph (A). (C) Amount of penalty.-- (i) In general.--The maximum amount of penalty imposed under this paragraph is $100 for each day for each individual with respect to which such a failure occurs. (ii) Considerations in imposition.--In determining the amount of any penalty to be assessed under this paragraph, the Secretary of Health and Human Services shall take into account the previous record of compliance of the person being assessed with the applicable requirements of this subtitle, the gravity of the violation, and the overall limitations for unintentional failures provided under section 4980B(c)(4) of the Internal Revenue Code of 1986. (iii) Limitations.-- (I) Penalty not to apply where failure not discovered exercising reasonable diligence.--No civil money penalty shall be imposed under this paragraph on any failure during any period for which it is established to the satisfaction of the Secretary that none of the persons against whom the penalty would be imposed knew, or exercising reasonable diligence would have known, that such failure existed. (II) Penalty not to apply to failures corrected within 30 days.--No civil money penalty shall be imposed under this paragraph on any failure if such failure was due to reasonable cause and not to willful neglect, and such failure is corrected during the 30-day period beginning on the first day any of the persons against whom the penalty would be imposed knew, or exercising reasonable diligence would have known, that such failure existed. (D) Administrative review.-- (i) Opportunity for hearing.--The person assessed shall be afforded an opportunity for hearing by the Secretary upon request made within 30 days after the date of the issuance of a notice of assessment. In such hearing the decision shall be made on the record pursuant to section 554 of title 5, United States Code. If no hearing is requested, the assessment shall constitute a final and unappealable order. (ii) Hearing procedure.--If a hearing is requested, the initial agency decision shall be made by an administrative law judge, and such decision shall become the final order unless the Secretary modifies or vacates the decision. Notice of intent to modify or vacate the decision of the administrative law judge shall be issued to the parties within 30 days after the date of the decision of the judge. A final order which takes effect under this paragraph shall be subject to review only as provided under subparagraph (D). (E) Judicial review.-- (i) Filing of action for review.--Any person against whom an order imposing a civil money penalty has been entered after an agency hearing under this paragraph may obtain review by the United States district court for any district in which such person is located or the United States District Court for the District of Columbia by filing a notice of appeal in such court within 30 days from the date of such order, and simultaneously sending a copy of such notice be registered mail to the Secretary. (ii) Certification of administrative record.--The Secretary shall promptly certify and file in such court the record upon which the penalty was imposed. (iii) Standard for review.--The findings of the Secretary shall be set aside only if found to be unsupported by substantial evidence as provided by section 706(2)(E) of title 5, United States Code. (iv) Appeal.--Any final decision, order, or judgment of such district court concerning such review shall be subject to appeal as provided in chapter 83 of title 28 of such Code. (F) Failure to pay assessment; maintenance of action.-- (i) Failure to pay assessment.--If any person fails to pay an assessment after it has become a final and unappealable order, or after the court has entered final judgment in favor of the Secretary, the Secretary shall refer the matter to the Attorney General who shall recover the amount assessed by action in the appropriate United States district court. (ii) Nonreviewability.--In such action the validity and appropriateness of the final order imposing the penalty shall not be subject to review. (G) Payment of penalties.--Except as otherwise provided, penalties collected under this paragraph shall be paid to the Secretary (or other officer) imposing the penalty and shall be available without appropriation and until expended for the purpose of enforcing the provisions with respect to which the penalty was imposed. (2) Federal enforcement only if no enforcement through state.--Paragraph (1) shall apply to enforcement of the requirements of section 101, 102, or 103 (other than section 103(e)) with respect to any entity which offers health insurance coverage and which is an insurer or HMO regulated by a State only if the Secretary of Health and Human Services has determined that such State has not provided for enforcement of State laws which govern the same matters as are governed by such section and which require compliance by such entity with at least the same requirements as those provided under such section. (3) Nonduplication of sanctions.--In no case shall a civil money penalty be imposed under this subsection for a violation of this subtitle for which an excise tax has been imposed under section 4980B of the Internal Revenue Code of 1986 or for which a civil money penalty has been imposed under the authority provided under subsection (b). (d) Coordination in Administration.--The Secretaries of the Treasury, Labor, and Health and Human Services shall issue regulations that are nonduplicative to carry out this subtitle. Such regulations shall be issued in a manner that assures coordination and nonduplication in their activities under this subtitle. Subtitle B--Certain Requirements for Insurers and HMOs in the Group and Individual Markets PART 1--AVAILABILITY OF GROUP HEALTH INSURANCE COVERAGE SEC. 131. GUARANTEED AVAILABILITY OF GENERAL COVERAGE IN THE SMALL GROUP MARKET. (a) Issuance of Coverage.-- (1) In general.--Subject to the succeeding subsections of this section, each insurer or HMO that offers health insurance coverage in the small group market in a State-- (A) must accept every small employer in the State that applies for such coverage; and (B) must accept for enrollment under such coverage every eligible individual (as defined in paragraph (2)) who applies for enrollment during the initial period in which the individual first becomes eligible for coverage under the group health plan and may not place any restriction which is inconsistent with section 103(a) on an individual being a participant or beneficiary so long as such individual is an eligible individual. (2) Eligible individual defined.--In this section, the term ``eligible individual'' means, with respect to an insurer or HMO that offers health insurance coverage to any small employer in the small group market, such an individual in relation to the employer as shall be determined-- (A) in accordance with the terms of such plan, (B) as provided by the insurer or HMO under rules of the insurer or HMO which are uniformly applicable, and (C) in accordance with all applicable State laws governing such insurer or HMO. (b) Special Rules for Network Plans and HMOs.-- (1) In general.--In the case of an insurer that offers health insurance coverage in the small group market through a network plan and in the case of an HMO that offers health insurance coverage in connection with such a plan, the insurer or HMO may-- (A) limit the employers that may apply for such coverage to those with eligible individuals whose place of employment or residence is in the service area for such plan or HMO; (B) limit the individuals who may be enrolled under such coverage to those whose place of residence or employment is within the service area for such plan or HMO; and (C) within the service area of such plan or HMO, deny such coverage to such employers if the insurer or HMO demonstrates that-- (i) it will not have the capacity to deliver services adequately to enrollees of any additional groups because of its obligations to [[Page H3050]] existing group contract holders and enrollees, and (ii) it is applying this paragraph uniformly to all employers without regard to the claims experience of those employers and their employees (and their beneficiaries) or the health status of such employees and beneficiaries. (2) 180-day suspension upon denial of coverage.--An insurer or HMO, upon denying health insurance coverage in any service area in accordance with paragraph (1)(C), may not offer coverage in the small group market within such service area for a period of 180 days after such coverage is denied. (c) Special Rule for Financial Capacity Limits.-- (1) In general.--An insurer or HMO may deny health insurance coverage in the small group market if the insurer or HMO demonstrates to the applicable State authority that-- (A) it does not have the financial reserves necessary to underwrite additional coverage, and (B) it is applying this paragraph uniformly to all employers without regard to the claims experience or duration of coverage of those employers and their employees (and their beneficiaries) or the health status of such employees and beneficiaries. (2) 180-day suspension upon denial of coverage.--An insurer or HMO upon denying health insurance coverage in connection with group health plans in any service area in accordance with paragraph (1) may not offer coverage in connection with group health plans in the small group market within such service area for a period of 180 days after such coverage is denied. (d) Exception to Requirement for Issuance of Coverage by Reason of Failure by Plan To Meet Certain Minimum Participation or Contribution Rules.-- (1) In general.--Subsection (a) shall not apply in the case of any group health plan with respect to which-- (A) participation rules of an insurer or HMO which are described in paragraph (2) are not met, or (B) contribution rules of an insurer or HMO which are described in paragraph (3) are not met. (2) Participation rules.--For purposes of paragraph (1)(A), participation rules (if any) of an insurer or HMO shall be treated as met with respect to a group health plan only if such rules are uniformly applicable and in accordance with applicable State law and the number or percentage of eligible individuals who, under the plan, are participants or beneficiaries equals or exceeds a level which is determined in accordance with such rules. (3) Contribution rules.--For purposes of paragraph (1)(B), contribution rules (if any) of an insurer or HMO shall be treated as met with respect to a group health plan only if such rules are in accordance with applicable State law. SEC. 132. GUARANTEED RENEWABILITY OF GROUP COVERAGE. (a) In General.--Except as provided in this section, if an insurer or health maintenance organization offers health insurance coverage in the small or large group market, the insurer or organization must renew or continue in force such coverage at the option of the employer. (b) General Exceptions.--An insurer or organization may nonrenew or discontinue health insurance coverage offered an employer based only on one or more of the following: (1) Nonpayment of premiums.--The employer has failed to pay premiums or contributions in accordance with the terms of the health insurance coverage or the insurer or organization has not received timely premium payments. (2) Fraud.--The employer has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of the coverage. (3) Violation with participation or contribution rules.-- The employer has failed to comply with a material plan provision relating to participation or contribution rules in accordance with section 131(d). (4) Termination of plan.--Subject to subsection (c), the insurer or organization is ceasing to offer coverage in the small or large group market in a State (or, in the case of a network plan or HMO, in a geographic area). (5) Movement outside service area.--The employer has changed the place of employment in such manner that employees and dependents reside and are employed outside the service area of the insurer or organization or outside the area for which the insurer or organization is authorized to do business. Paragraph (5) shall apply to an insurer or HMO only if it is applied uniformly without regard to the claims experience of employers and their employees (and their beneficiaries) or the health status of such employees and beneficiaries. (c) Exceptions for Uniform Termination of Coverage.-- (1) Particular type of coverage not offered.--In any case in which a insurer or HMO decides to discontinue offering a particular type of health insurance coverage in the small or large group market, coverage of such type may be discontinued by the insurer or organization only if-- (A) the insurer or organization provides notice to each employer provided coverage of this type in such market (and participants and beneficiaries covered under such coverage) of such discontinuation at least 90 days prior to the date of the discontinuation of such coverage; (B) the insurer or organization offers to each employer in the small employer or large employer market provided coverage of this type, the option to purchase any other health insurance coverage currently being offered by the insurer or organization for employers in such market; and (C) in exercising the option to discontinue coverage of this type and in offering one or more replacement coverage, the insurer or organization acts uniformly without regard to the health status or insurability of participants or beneficiaries covered or new participants or beneficiaries who may become eligible for such coverage. (2) Discontinuance of all coverage.-- (A) In general.--Subject to subparagraph (C), in any case in which an insurer or HMO elects to discontinue offering all health insurance coverage in the small group market or the large group market, or both markets, in a State, health insurance coverage may be discontinued by the insurer or organization only if-- (i) the insurer or organization provides notice to the applicable State authority and to each employer (and participants and beneficiaries covered under such coverage) of such discontinuation at least 180 days prior to the date of the expiration of such coverage, and (ii) all health insurance issued or delivered for issuance in the State in such market (or markets) are discontinued and coverage under such health insurance coverage in such market (or markets) is not renewed. (B) Prohibition on market reentry.--In the case of a discontinuation under subparagraph (A) in one or both markets, the insurer or organization may not provide for the issuance of any health insurance coverage in the market and State involved during the 5-year period beginning on the date of the discontinuation of the last health insurance coverage not so renewed. (d) Exception for Uniform Modification of Coverage.--At the time of coverage renewal, an insurer or HMO may modify the coverage offered to a group health plan in the group health market so long as such modification is effective on a uniform basis among group health plans with that type of coverage. PART 2--AVAILABILITY OF INDIVIDUAL HEALTH INSURANCE COVERAGE SEC. 141. GUARANTEED AVAILABILITY OF INDIVIDUAL HEALTH INSURANCE COVERAGE TO CERTAIN INDIVIDUALS WITH PRIOR GROUP COVERAGE. (a) Goals.--The goals of this section are-- (1) to guarantee that any qualifying individual (as defined in subsection (b)(1)) is able to obtain qualifying coverage (as defined in subsection (b)(2)); and (2) to assure that qualifying individuals obtaining such coverage receive credit for their prior coverage toward the new coverage's preexisting condition exclusion period (if any) in a manner consistent with subsection (b)(3). (b) Qualifying Individual and Health Insurance Coverage Defined.--In this section-- (1) Qualifying individual.--The term ``qualifying individual'' means an individual-- (A)(i) for whom, as of the date on which the individual seeks coverage under this section, the aggregate of the qualified coverage periods (as defined in section 101(b)(3)(B)) is 18 or more months and (ii) whose most recent prior coverage was under a group health plan, governmental plan, or church plan (or health insurance coverage offered in connection with any such plan); (B) who is not eligible for coverage under (i) a group health plan, (ii) part A or part B of title XVIII of the Social Security Act, or (iii) a State plan under title XIX of such Act (or any successor program), and does not have individual health insurance coverage; (C) with respect to whom the most recent coverage within the coverage period described in subparagraph (A)(i) was not terminated based on a factor described in paragraph (1) or (2) of section 132(b); (D) if the individual had been offered the option of continuation coverage under a COBRA continuation provision or under a similar State program, who elected such coverage; and (E) who, if the individual elected such continuation coverage, has exhausted such continuation coverage. In applying subparagraph (A)(i), the reference in section 101(b)(3)(B)(ii) to a 60-day break in coverage is deemed a reference to a 60-day break in any coverage described in section 101(b)(3)(B)(i). (2) Qualifying coverage.-- (A) In general.--The term ``qualifying coverage'' means, with respect to an insurer or HMO in relation to an qualifying individual, individual health insurance coverage for which the actuarial value of the benefits is not less than-- (i) the weighted average actuarial value of the benefits provided by all the individual health insurance coverage issued by the insurer or HMO in the State during the previous year (not including coverage issued under this section), or (ii) the weighted average of the actuarial value of the benefits provided by all the individual health insurance coverage issued by all insurers and HMOs in the State during the previous year (not including coverage issued under this section), [[Page H3051]] as elected by the plan or by the State under subsection (c)(1). (B) Assumptions.--For purposes of subparagraph (A), the actuarial value of benefits provided under individual health insurance coverage shall be calculated based on a standardized population and a set of standardized utilization and cost factors. (3) Crediting for previous coverage.--Crediting is consistent with this paragraph only if any preexisting condition exclusion period is reduced at least to the extent such a period would be reduced if the coverage under this section were under a group health plan to which section 101(a) applies. In carrying out this subsection, provisions similar to the provisions of section 101(c) shall apply. (c) Optional State Establishment of Mechanisms To Achieve Goals of Guaranteeing Availability of Coverage.-- (1) In general.--Any State may establish, to the extent of the State's authority, public or private mechanisms reasonably designed to meet the goals specified in subsection (a). If a State implements such a mechanism by the deadline specified in paragraph (4), the State may elect to have such mechanisms apply instead of having subsection (d)(3) apply in the State. An election under this paragraph shall be by notice from the chief executive officer of the State to the Secretary of Health and Human Services on a timely basis consistent with the deadlines specified in paragraph (4). In establishing what is qualifying coverage under such a mechanism under this subsection, a State may exercise the election described in subsection (b)(2)(A) with respect to each insurer or HMO in the State (or on a collective basis after exercising such election for each such insurer or HMO). (2) Types of mechanisms.--State mechanisms under this subsection may include one or more (or a combination) of the following: (A) Health insurance coverage pools or programs authorized or established by the State. (B) Mandatory group conversion policies. (C) Guaranteed issue of one or more plans of individual health insurance coverage to qualifying individuals. (D) Open enrollment by one or more insurers or HMOs. The mechanisms described in the previous sentence are not an exclusive list of the mechanisms (or combinations of mechanisms) that may be used under this subsection. (3) Safe harbor for benefits under current risk pools.--In the case of a State that has a health insurance coverage pool or risk pool in effect on March 12, 1996, and that implements the mechanism described in paragraph (2)(A), the benefits under such mechanism (or benefits the actuarial value of which is not less than the actuarial value of such current benefits, using the assumptions described in subsection (b)(2)(B)) are deemed, for purposes of this section, to constitute qualified coverage. (4) Deadline for state implementation.-- (A) In general.--Subject to subparagraph (B), the deadline under this paragraph is July 1, 1997. (B) Extension to permit legislation.--The deadline under this paragraph is July 1, 1998, in the case of a State the legislature of which does not have a regular legislative session at any time between January 1, 1997, and June 30, 1997. (C) Construction.--Nothing in this section shall be construed as preventing a State from-- (i) implementing guaranteed availability mechanisms before the deadline, (ii) continuing in effect mechanisms that are in effect before the date of the enactment of this Act, (iii) offering guaranteed availability of coverage that is not qualifying coverage, or (iv) offering guaranteed availability of coverage to individuals who are not qualifying individuals. (d) Fallback Provisions.-- (1) No state election.--If a State has not provided notice to the Secretary of an election on a timely basis under subsection (c), the Secretary shall notify the State that paragraph (3) will be applied in the State. (2) Preliminary determination after state election.--If-- (A) a State has provided notice of an election on a timely basis under subsection (c), and (B) the Secretary finds, after consultation with the chief executive officer of the State and the insurance commissioner or chief insurance regulatory official of the State, that such a mechanism (for which notice was provided) is not reasonably designed to meet the goals specified in subsection (a), the Secretary shall notify the State of such preliminary determination, of the consequences under paragraph (3) of a failure to implement such a mechanism, and permit the State a reasonable opportunity in which to modify the mechanism (or to adopt another mechanism) that is reasonably designed to meet the goals specified in subsection (a). The Secretary shall not make such a determination on any basis other than the basis described in subparagraph (B). If, after providing such notice and opportunity, the Secretary finds that the State has not implemented such a mechanism, the Secretary shall notify the State that paragraph (3) will be applied in the State. (3) Description of fallback mechanism.--As provided under paragraphs (1) and (2) and subject to paragraph (5), each insurer or HMO in the State involved that issues individual health insurance coverage-- (A) shall offer qualifying health insurance coverage, in which qualifying individuals obtaining such coverage receive credit for their prior coverage toward the new coverage's preexisting condition exclusion period (if any) in a manner consistent with subsection (b)(3), to each

Summary:

All articles in House section

HEALTH COVERAGE AVAILABILITY AND AFFORDABILITY ACT OF 1996
(House of Representatives - March 28, 1996)

Text of this article available as: TXT PDF [Pages H3045-H3147] {time} 1815 HEALTH COVERAGE AVAILABILITY AND AFFORDABILITY ACT OF 1996 Mr. ARCHER. Mr. Speaker, pursuant to House Resolution 392, I call up the bill (H.R. 3103), to amend the Internal Revenue Code of 1986 to improve portability and continuity of health insurance coverage in the group and individual markets, to combat waste, fraud, and abuse in health insurance and health care delivery, to promote the use of medical savings accounts, to improve access to long-term care services and coverage, to simplify the administration of health insurance, and for other purposes, and ask for its immediate consideration in the House. The Clerk read the title of the bill. The SPEAKER pro tempore (Mr. Combest). Pursuant to House Resolution 392, the amendment in the nature of a substitute consisting of the text of H.R. 3160 modified by the amendment specified in part 1 of House Report 104-501 is adopted. The text of H.R. 3103 consisting of the text of H.R. 3160, as modified, is as follows: H.R. 3160 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) Short Title.--This Act may be cited as the ``Health Coverage Availability and Affordability Act of 1996''. (b) Table of Contents.--The table of contents of this Act is as follows: Sec. 1. Short title; table of contents. TITLE I--IMPROVED AVAILABILITY AND PORTABILITY OF HEALTH INSURANCE COVERAGE Subtitle A--Coverage Under Group Health Plans Sec. 101. Portability of coverage for previously covered individuals. Sec. 102. Limitation on preexisting condition exclusions; no application to certain newborns, adopted children, and pregnancy. Sec. 103. Prohibiting exclusions based on health status and providing for enrollment periods. Sec. 104. Enforcement. Subtitle B--Certain Requirements for Insurers and HMOs in the Group and Individual Markets Part 1--Availability of Group Health Insurance Coverage Sec. 131. Guaranteed availability of general coverage in the small group market. Sec. 132. Guaranteed renewability of group coverage. [[Page H3046]] Part 2--Availability of Individual Health Insurance Coverage Sec. 141. Guaranteed availability of individual health insurance coverage to certain individuals with prior group coverage. Sec. 142. Guaranteed renewability of individual health insurance coverage. Part 3--Enforcement Sec. 151. Incorporation of provisions for State enforcement with Federal fallback authority. Subtitle C--Affordable and Available Health Coverage Through Multiple Employer Pooling Arrangements Sec. 161. Clarification of duty of the Secretary of Labor to implement provisions of current law providing for exemptions and solvency standards for multiple employer health plans. ``Part 7--Rules Governing Regulation of Multiple Employer Health Plans ``Sec. 701. Definitions. ``Sec. 702. Clarification of duty of the Secretary to implement provisions of current law providing for exemptions and solvency standards for multiple employer health plans. ``Sec. 703. Requirements relating to sponsors, boards of trustees, and plan operations. ``Sec. 704. Other requirements for exemption. ``Sec. 705. Maintenance of reserves. ``Sec. 706. Notice requirements for voluntary termination. ``Sec. 707. Corrective actions and mandatory termination. ``Sec. 708. Additional rules regarding State authority.''. Sec. 162. Affordable and available fully insured health coverage through voluntary health insurance associations. Sec. 163. State authority fully applicable to self-insured multiple employer welfare arrangements providing medical care which are not exempted under new part 7. Sec. 164. Clarification of treatment of single employer arrangements. Sec. 165. Clarification of treatment of certain collectively bargained arrangements. Sec. 166. Treatment of church plans. Sec. 167. Enforcement provisions relating to multiple employer welfare arrangements. Sec. 168. Cooperation between Federal and State authorities. Sec. 169. Filing and disclosure requirements for multiple employer welfare arrangements offering health benefits. Sec. 170. Single annual filing for all participating employers. Sec. 171. Effective date; transitional rule. Subtitle D--Definitions; General Provisions Sec. 191. Definitions; scope of coverage. Sec. 192. State flexibility to provide greater protection. Sec. 193. Effective date. Sec. 194. Rule of construction. Sec. 195. Findings relating to exercise of commerce clause authority. TITLE II--PREVENTING HEALTH CARE FRAUD AND ABUSE; ADMINISTRATIVE SIMPLIFICATION; MEDICAL LIABILITY REFORM Sec. 200. References in title. Subtitle A--Fraud and Abuse Control Program Sec. 201. Fraud and abuse control program. Sec. 202. Medicare integrity program. Sec. 203. Beneficiary incentive programs. Sec. 204. Application of certain health anti-fraud and abuse sanctions to fraud and abuse against Federal health care programs. Sec. 205. Guidance regarding application of health care fraud and abuse sanctions. Subtitle B--Revisions to Current Sanctions for Fraud and Abuse Sec. 211. Mandatory exclusion from participation in medicare and State health care programs. Sec. 212. Establishment of minimum period of exclusion for certain individuals and entities subject to permissive exclusion from medicare and State health care programs. Sec. 213. Permissive exclusion of individuals with ownership or control interest in sanctioned entities. Sec. 214. Sanctions against practitioners and persons for failure to comply with statutory obligations. Sec. 215. Intermediate sanctions for medicare health maintenance organizations. Sec. 216. Additional exception to anti-kickback penalties for discounting and managed care arrangements. Sec. 217. Criminal penalty for fraudulent disposition of assets in order to obtain medicaid benefits. Sec. 218. Effective date. Subtitle C--Data Collection Sec. 221. Establishment of the health care fraud and abuse data collection program. Subtitle D--Civil Monetary Penalties Sec. 231. Social security act civil monetary penalties. Sec. 232. Clarification of level of intent required for imposition of sanctions. Sec. 233. Penalty for false certification for home health services. Subtitle E--Revisions to Criminal Law Sec. 241. Definitions relating to Federal health care offense. Sec. 242. Health care fraud. Sec. 243. Theft or embezzlement. Sec. 244. False statements. Sec. 245. Obstruction of criminal investigations of health care offenses. Sec. 246. Laundering of monetary instruments. Sec. 247. Injunctive relief relating to health care offenses. Sec. 248. Authorized investigative demand procedures. Sec. 249. Forfeitures for Federal health care offenses. Sec. 250. Relation to ERISA authority. Subtitle F--Administrative Simplification Sec. 251. Purpose. Sec. 252. Administrative simplification. ``Part C--Administrative Simplification ``Sec. 1171. Definitions. ``Sec. 1172. General requirements for adoption of standards. ``Sec. 1173. Standards for information transactions and data elements. ``Sec. 1174. Timetables for adoption of standards. ``Sec. 1175. Requirements. ``Sec. 1176. General penalty for failure to comply with requirements and standards. ``Sec. 1177. Wrongful disclosure of individually identifiable health information. ``Sec. 1178. Effect on State law. Sec. 253. Changes in membership and duties of National Committee on Vital and Health Statistics. Subtitle G--Duplication and Coordination of Medicare-Related Plans Sec. 261. Duplication and coordination of medicare-related plans. Subtitle H--Medical Liability Reform Part 1--General Provisions Sec. 271. Federal reform of health care liability actions. Sec. 272. Definitions. Sec. 273. Effective date. Part 2--Uniform Standards for Health Care Liability Actions Sec. 281. Statute of limitations. Sec. 282. Calculation and payment of damages. Sec. 283. Alternative dispute resolution. TITLE III--TAX-RELATED HEALTH PROVISIONS Sec. 300. Amendment of 1986 code. Subtitle A--Medical Savings Accounts Sec. 301. Medical savings accounts. Subtitle B--Increase in Deduction for Health Insurance Costs of Self- Employed Individuals Sec. 311. Increase in deduction for health insurance costs of self- employed individuals. Subtitle C--Long-Term Care Services and Contracts Part I--General Provisions Sec. 321. Treatment of long-term care insurance. Sec. 322. Qualified long-term care services treated as medical care. Sec. 323. Reporting requirements. Part II--Consumer Protection Provisions Sec. 325. Policy requirements. Sec. 326. Requirements for issuers of long-term care insurance policies. Sec. 327. Coordination with State requirements. Sec. 328. Effective dates. Subtitle D--Treatment of Accelerated Death Benefits Sec. 331. Treatment of accelerated death benefits by recipient. Sec. 332. Tax treatment of companies issuing qualified accelerated death benefit riders. Subtitle E--High-Risk Pools Sec. 341. Exemption from income tax for State-sponsored organizations providing health coverage for high-risk individuals. Subtitle F--Organizations Subject to Section 833 Sec. 351. Organizations subject to section 833. TITLE IV--REVENUE OFFSETS Sec. 400. Amendment of 1986 Code. Subtitle A--Repeal of Bad Debt Reserve Method for Thrift Savings Associations Sec. 401. Repeal of bad debt reserve method for thrift savings associations. Subtitle B--Reform of the Earned Income Credit Sec. 411. Earned income credit denied to individuals not authorized to be employed in the United States. Subtitle C--Treatment of Individuals Who Lose United States Citizenship Sec. 421. Revision of income, estate, and gift taxes on individuals who lose United States citizenship. Sec. 422. Information on individuals losing United States citizenship. Sec. 423. Report on tax compliance by United States citizens and residents living abroad. [[Page H3047]] TITLE I--IMPROVED AVAILABILITY AND PORTABILITY OF HEALTH INSURANCE COVERAGE Subtitle A--Coverage Under Group Health Plans SEC. 101. PORTABILITY OF COVERAGE FOR PREVIOUSLY COVERED INDIVIDUALS. (a) Crediting Periods of Previous Coverage Toward Preexisting Condition Restrictions.--Subject to the succeeding provisions of this section, a group health plan, and an insurer or health maintenance organization offering health insurance coverage in connection with a group health plan, shall provide that any preexisting condition limitation period (as defined in subsection (b)(2)) is reduced by the length of the aggregate period of qualified prior coverage (if any, as defined in subsection (b)(3)) applicable to the participant or beneficiary as of the date of commencement of coverage under the plan. (b) Definitions and Other Provisions Relating to Preexisting Conditions.-- (1) Preexisting condition.-- (A) In general.--For purposes of this subtitle, subject to subparagraph (B), the term ``preexisting condition'' means a condition, regardless of the cause of the condition, for which medical advice, diagnosis, care, or treatment was recommended or received within the 6-month period ending on the day before-- (i) the effective date of the coverage of such participant or beneficiary, or (ii) the earliest date upon which such coverage could have been effective if there were no waiting period applicable, whichever is earlier. (B) Treatment of genetic information.--For purposes of this section, genetic information shall not be considered to be a preexisting condition, so long as treatment of the condition to which the information is applicable has not been sought during the 6-month period described in subparagraph (A). (2) Preexisting condition limitation period.--For purposes of this subtitle, the term ``preexisting condition limitation period'' means, with respect to coverage of an individual under a group health plan or under health insurance coverage, the period during which benefits with respect to treatment of a condition of such individual are not provided based on the fact that the condition is a preexisting condition. (3) Aggregate period of qualified prior coverage.-- (A) In general.--For purposes of this section, the term ``aggregate period of qualified prior coverage'' means, with respect to commencement of coverage of an individual under a group health plan or health insurance coverage offered in connection with a group health plan, the aggregate of the qualified coverage periods (as defined in subparagraph (B)) of such individual occurring before the date of such commencement. Such period shall be treated as zero if there is more than a 60-day break in coverage under a group health plan (or health insurance coverage offered in connection with such a plan) between the date the most recent qualified coverage period ends and the date of such commencement. (B) Qualified coverage period.-- (i) In general.--For purposes of this paragraph, subject to subsection (c), the term ``qualified coverage period'' means, with respect to an individual, any period of coverage of the individual under a group health plan, health insurance coverage, under title XVIII or XIX of the Social Security Act, coverage under the TRICARE program under chapter 55 of title 10, United States Code, a program of the Indian Health Service, and State health insurance coverage or risk pool, and includes coverage under a health plan offered under chapter 89 of title 5, United States Code. (ii) Disregarding periods before breaks in coverage.--Such term does not include any period occurring before any 60-day break in coverage described in subparagraph (A). (C) Waiting period not treated as a break in coverage.--For purposes of subparagraphs (A) and (B), any period that is in a waiting period for any coverage under a group health plan (or for health insurance coverage offered in connection with a group health plan) shall not be considered to be a break in coverage described in subparagraph (B)(ii). (D) Establishment of period.--A qualified coverage period with respect to an individual shall be established through presentation of certifications described in subsection (c) or in such other manner as may be specified in regulations to carry out this title. (c) Certifications of Coverage; Conforming Coverage.-- (1) In general.--The plan administrator of a group health plan, or the insurer or HMO offering health insurance coverage in connection with a group health plan, shall, on request made on behalf of an individual covered (or previously covered within the previous 18 months) under the plan or coverage, provide for a certification of the period of coverage of the individual under such plan or coverage and of the waiting period (if any) imposed with respect to the individual for any coverage under the plan. (2) Standard method.--Subject to paragraph (3), a group health plan, or insurer or HMO offering health insurance coverage in connection with a group health plan, shall determine qualified coverage periods under subsection (b)(3)(B) by including all periods described in such subsection, without regard to the specific benefits offered during such a period. (3) Alternative method.--Such a plan, insurer, or HMO may elect to make such determination on a benefit-specific basis for all participants and beneficiaries and not to include as a qualified coverage period with respect to a specific benefit coverage during a previous period unless such previous coverage for that benefit was included at the end of the most recent period of coverage. In the case of such an election-- (A) the plan, insurer, or HMO shall prominently state in any disclosure statements concerning the plan or coverage and to each enrollee at the time of enrollment under the plan (or at the time the health insurance coverage is offered for sale in the group health market) that the plan or coverage has made such election and shall include a description of the effect of this election; and (B) upon the request of the plan, insurer, or HMO, the entity providing a certification under paragraph (1)-- (i) shall promptly disclose to the requesting plan, insurer, or HMO the plan statement (insofar as it relates to health benefits under the plan) or other detailed benefit information on the benefits available under the previous plan or coverage, and (ii) may charge for the reasonable cost of providing such information. SEC. 102. LIMITATION ON PREEXISTING CONDITION EXCLUSIONS; NO APPLICATION TO CERTAIN NEWBORNS, ADOPTED CHILDREN, AND PREGNANCY. (a) Limitation of Period.-- (1) In general.--Subject to the succeeding provisions of this section, a group health plan, and an insurer or HMO offering health insurance coverage in connection with a group health plan, shall provide that any preexisting condition limitation period (as defined in section 101(b)(2)) does not exceed 12 months, counting from the effective date of coverage. (2) Extension of period in the case of late enrollment.--In the case of a participant or beneficiary whose initial coverage commences after the date the participant or beneficiary first becomes eligible for coverage under the group health plan, the reference in paragraph (1) to ``12 months'' is deemed a reference to ``18 months''. (b) Exclusion Not Applicable to Certain Newborns and Certain Adoptions.-- (1) In general.--Subject to paragraph (2), a group health plan, and an insurer or HMO offering health insurance coverage in connection with a group health plan, may not provide any limitation on benefits based on the existence of a preexisting condition in the case of-- (A) an individual who within the 30-day period beginning with the date of birth, or (B) an adopted child or a child placed for adoption beginning at the time of adoption or placement if the individual, within the 30-day period beginning on the date of adoption or placement, becomes covered under a group health plan or otherwise becomes covered under health insurance coverage (or covered for medical assistance under title XIX of the Social Security Act). (2) Loss if break in coverage.--Paragraph (1) shall no longer apply to an individual if the individual does not have any coverage described in section 101(b)(3)(B)(i) for a continuous period of 60 days, not counting in such period any days that are in a waiting period for any coverage under a group health plan. (3) Placed for adoption defined.--In this subsection and section 103(e), the term ``placement'', or being ``placed'', for adoption, in connection with any placement for adoption of a child with any person, means the assumption and retention by such person of a legal obligation for total or partial support of such child in anticipation of adoption of such child. The child's placement with such person terminates upon the termination of such legal obligation. (c) Exclusion Not Applicable to Pregnancy.--For purposes of this section, pregnancy shall not be treated as a preexisting condition. (d) Eligibility Period Imposed by Health Maintenance Organizations as Alternative to Preexisting Condition Limitation.--A health maintenance organization which offers health insurance coverage in connection with a group health plan and which does not use the preexisting condition limitations allowed under this section and section 101 with respect to any particular coverage option may impose an eligibility period for such coverage option, but only if such period does not exceed-- (1) 60 days, in the case of a participant or beneficiary whose initial coverage commences at the time such participant or beneficiary first becomes eligible for coverage under the plan, or (2) 90 days, in the case of a participant or beneficiary whose initial coverage commences after the date on which such participant or beneficiary first becomes eligible for coverage. Such an HMO may use alternative methods, from those described in the previous sentence, to address adverse selection as approved by the applicable State authority. For purposes of this subsection, the term ``eligibility period'' means a period which, under the terms of the health insurance coverage offered by the health maintenance organization, must expire before the health insurance coverage becomes effective. Any such eligibility period shall be treated for purposes of this subtitle as a waiting period under the plan and shall run concurrently [[Page H3048]] with any other applicable waiting period under the plan. SEC. 103. PROHIBITING EXCLUSIONS BASED ON HEALTH STATUS AND PROVIDING FOR ENROLLMENT PERIODS. (a) Prohibition of Exclusion of Participants or Beneficiaries Based on Health Status.-- (1) In general.--A group health plan, and an insurer or HMO offering health insurance coverage in connection with a group health plan, may not exclude an employee or his or her beneficiary from being (or continuing to be) enrolled as a participant or beneficiary under the terms of such plan or coverage based on health status (as defined in section 191(c)(6)). (2) Construction.--Nothing in this subsection shall be construed as preventing the establishment of preexisting condition limitations and restrictions to the extent consistent with the provisions of this subtitle. (b) Prohibition of Discrimination in Premium Contributions of Individual Participants or Beneficiaries Based on Health Status.-- (1) In general.--A group health plan, and an insurer or HMO offering health insurance coverage in connection with a group health plan, may not require a participant or beneficiary to pay a premium or contribution which is greater than such premium or contribution for a similarly situated participant or beneficiary solely on the basis of the health status of the participant or beneficiary. (2) Construction.--Nothing in this subsection is intended-- (A) to effect the premium rates an insurer or HMO may charge an employer for health insurance coverage provided in connection a group health plan, (B) to prevent a group health plan (or insurer or HMO in health insurance coverage offered in connection with such a plan) from establishing premium discounts or modifying otherwise applicable copayments or deductibles in return for adherence to programs of health promotion and disease prevention, or (C) to prevent such a plan, insurer, or HMO from varying the premiums or contributions required of participants or beneficiaries based on factors (such as scope of benefits, geographic area of residence, or wage levels) that are not directly related to health status. (c) Enrollment of Eligible Individuals Who Lose Other Coverage.--A group health plan shall permit an uncovered employee who is otherwise eligible for coverage under the terms of the plan (or an uncovered dependent, as defined under the terms of the plan, of such an employee, if family coverage is available) to enroll for coverage under the plan under at least one benefit option if each of the following conditions is met: (1) The employee or dependent was covered under a group health plan or had health insurance coverage at the time coverage was previously offered to the employee or individual. (2) The employee stated in writing at such time that coverage under a group health plan or health insurance coverage was the reason for declining enrollment. (3) The employee or dependent lost coverage under a group health plan or health insurance coverage (as a result of loss of eligibility for the coverage, termination of employment, or reduction in the number of hours of employment). (4) The employee requests such enrollment within 30 days after the date of termination of such coverage. (d) Dependent Beneficiaries.-- (1) In general.--If a group health plan makes family coverage available, the plan may not require, as a condition of coverage of an individual as a dependent (as defined under the terms of the plan) of a participant in the plan, a waiting period applicable to the coverage of a dependent who-- (A) is a newborn, (B) is an adopted child or child placed for adoption (within the meaning of section 102(b)(3)), at the time of adoption or placement, or (C) is a spouse, at the time of marriage, if the participant has met any waiting period applicable to that participant. (2) Timely enrollment.-- (A) In general.--Enrollment of a participant's beneficiary described in paragraph (1) shall be considered to be timely if a request for enrollment is made within 30 days of the date family coverage is first made available or, in the case described in-- (i) paragraph (1)(A), within 30 days of the date of the birth, (ii) paragraph (1)(B), within 30 days of the date of the adoption or placement for adoption, or (iii) paragraph (1)(C), within 30 days of the date of the marriage with such a beneficiary who is the spouse of the participant, if family coverage is available as of such date. (B) Coverage.--If available coverage includes family coverage and enrollment is made under such coverage on a timely basis under subparagraph (A), the coverage shall become effective not later than the first day of the first month beginning 15 days after the date the completed request for enrollment is received. (e) Multiemployer Plans, Multiple Employer Health Plans, and Multiple Employer Welfare Arrangements.--A group health plan which is a multi-employer plan, a multiple employer health plan (as defined in section 701(4) of the Employee Retirement Income Security Act of 1974), or a multiple employer welfare arrangement (to the extent to which benefits under the arrangement consist of medical care) may not deny an employer whose employees are covered under such a plan or arrangement continued access to the same or different coverage under the terms of such a plan or arrangement, other than-- (1) for nonpayment of contributions, (2) for fraud or other intentional misrepresentation of material fact by the employer, (3) for noncompliance with material plan or arrangement provisions, (4) because the plan or arrangement is ceasing to offer any coverage in a geographic area, (5) for failure to meet the terms of an applicable collective bargaining agreement, to renew a collective bargaining or other agreement requiring or authorizing contributions to the plan, or to employ employees covered by such an agreement, (6) in the case of a plan or arrangement to which subparagraph (C), (D), or (E) of section 3(40) of the Employee Retirement Income Security Act of 1974 applies, to the extent necessary to meet the requirements of such subparagraph, or (7) in the case of a multiple employer health plan (as defined in section 701(4) of such Act), for failure to meet the requirements under part 7 of subtitle B of title I of such Act for exemption under section 514(b)(6)(B) of such Act. SEC. 104. ENFORCEMENT. (a) Enforcement Through COBRA Provisions in Internal Revenue Code.-- (1) Application of cobra sanctions.--Subsection (a) of section 4980B of the Internal Revenue Code of 1986 is amended by striking ``the requirements of'' and all that follows and inserting ``the requirements of-- ``(1) subsection (f) with respect to any qualified beneficiary, or ``(2) subject to subsection (h)-- ``(A) section 101 or 102 of the Health Coverage Availability and Affordability Act of 1996 with respect to any individual covered under the group health plan, or ``(B) section 103 (other than subsection (e)) of such Act with respect to any individual.''. (2) Notice requirement.--Section 4980B(f)(6)(A) of such Code is amended by inserting before the period the following: ``and subtitle A of title I of the Health Coverage Availability and Affordability Act of 1996''. (3) Special rules.--Section 4980B of such Code is amended by adding at the end the following: ``(h) Special Rules.--For purposes of applying this section in the case of requirements described in subsection (a)(2) relating to section 101, section 102, or section 103 (other than subsection (e)) of the Health Coverage Availability and Affordability Act of 1996-- ``(1) In general.-- ``(A) Definition of group health plan.--The term `group health plan' has the meaning given such term in section 191(a) of the Health Coverage Availability and Affordability Act of 1996. ``(B) Qualified beneficiary.--Subsections (b), (c), and (e) shall be applied by substituting the term `individual' for the term `qualified beneficiary' each place it appears. ``(C) Noncompliance period.--Clause (ii) of subsection (b)(2)(B) and the second sentence of subsection (b)(2) shall not apply. ``(D) Limitation on tax.--Subparagraph (B) of subsection (c)(3) shall not apply. ``(E) Liability for tax.--Paragraph (2) of subsection (e) shall not apply. ``(2) Deferral to state regulation.--No tax shall be imposed by this section on any failure to meet the requirements of such section by any entity which offers health insurance coverage and which is an insurer or health maintenance organization (as defined in section 191(c) of the Health Coverage Availability and Affordability Act of 1996) regulated by a State unless the Secretary of Health and Human Services has made the determination described in section 104(c)(2) of such Act with respect to such State, section, and entity. ``(3) Limitation for insured plans.--In the case of a group health plan of a small employer (as defined in section 191 of the Health Coverage Availability and Affordability Act of 1996) that provides health care benefits solely through a contract with an insurer or health maintenance organization (as defined in such section), no tax shall be imposed by this section upon the employer on a failure to meet such requirements if the failure is solely because of the product offered by the insurer or organization under such contract. ``(4) Limitation on imposition of tax.--In no case shall a tax be imposed by this section for a failure to meet such a requirement if-- ``(A) a civil money penalty has been imposed by the Secretary of Labor under part 5 of subtitle A of title I of the Employee Retirement Income Security Act of 1974 with respect to such failure, or ``(B) a civil money penalty has been imposed by the Secretary of Health and Human Services under section 104(c) of the Health Coverage Availability and Affordability Act of 1996 with respect to such failure.''. (b) Enforcement Through ERISA Sanctions for Certain Group Health Plans.-- (1) In general.--Subject to the succeeding provisions of this subsection, sections 101 through 103 of this subtitle (and subtitle D insofar as it is applicable to such sections) shall be deemed to be provisions of title I of the Employee Retirement Income Security [[Page H3049]] Act of 1974 for purposes of applying such title. (2) Federal enforcement only if no enforcement through state.--The Secretary of Labor shall enforce each section referred to in paragraph (1) with respect to any entity which is an insurer or health maintenance organization regulated by a State only if the Secretary of Labor determines that such State has not provided for enforcement of State laws which govern the same matters as are governed by such section and which require compliance by such entity with at least the same requirements as those provided under such section. (3) Limitations on liability.-- (A) No application where failure not discovered exercising reasonable diligence.--No liability shall be imposed under this subsection on the basis of any failure during any period for which it is established to the satisfaction of the Secretary of Labor that none of the persons against whom the liability would be imposed knew, or exercising reasonable diligence would have known, that such failure existed. (B) No application where failure corrected within 30 days.--No liability shall be imposed under this subsection on the basis of any failure if such failure was due to reasonable cause and not to willful neglect, and such failure is corrected during the 30-day period beginning on the first day any of the persons against whom the liability would be imposed knew, or exercising reasonable diligence would have known, that such failure existed. (4) Avoiding duplication of certain penalties.--In no case shall a civil money penalty be imposed under the authority provided under paragraph (1) for a violation of this subtitle for which an excise tax has been imposed under section 4980B of the Internal Revenue Code of 1986 or a civil money penalty imposed under subsection (c). (c) Enforcement Through Civil Money Penalties.-- (1) Imposition.-- (A) In general.--Subject to the succeeding provisions of this subsection, any group health plan, insurer, or organization that fails to meet a requirement of this subtitle (other than section 103(e)) is subject to a civil money penalty under this section. (B) Liability for penalty.--Rules similar to the rules described in section 4980B(e) of the Internal Revenue Code of 1986 for liability for a tax imposed under section 4980B(a) of such Code shall apply to liability for a penalty imposed under subparagraph (A). (C) Amount of penalty.-- (i) In general.--The maximum amount of penalty imposed under this paragraph is $100 for each day for each individual with respect to which such a failure occurs. (ii) Considerations in imposition.--In determining the amount of any penalty to be assessed under this paragraph, the Secretary of Health and Human Services shall take into account the previous record of compliance of the person being assessed with the applicable requirements of this subtitle, the gravity of the violation, and the overall limitations for unintentional failures provided under section 4980B(c)(4) of the Internal Revenue Code of 1986. (iii) Limitations.-- (I) Penalty not to apply where failure not discovered exercising reasonable diligence.--No civil money penalty shall be imposed under this paragraph on any failure during any period for which it is established to the satisfaction of the Secretary that none of the persons against whom the penalty would be imposed knew, or exercising reasonable diligence would have known, that such failure existed. (II) Penalty not to apply to failures corrected within 30 days.--No civil money penalty shall be imposed under this paragraph on any failure if such failure was due to reasonable cause and not to willful neglect, and such failure is corrected during the 30-day period beginning on the first day any of the persons against whom the penalty would be imposed knew, or exercising reasonable diligence would have known, that such failure existed. (D) Administrative review.-- (i) Opportunity for hearing.--The person assessed shall be afforded an opportunity for hearing by the Secretary upon request made within 30 days after the date of the issuance of a notice of assessment. In such hearing the decision shall be made on the record pursuant to section 554 of title 5, United States Code. If no hearing is requested, the assessment shall constitute a final and unappealable order. (ii) Hearing procedure.--If a hearing is requested, the initial agency decision shall be made by an administrative law judge, and such decision shall become the final order unless the Secretary modifies or vacates the decision. Notice of intent to modify or vacate the decision of the administrative law judge shall be issued to the parties within 30 days after the date of the decision of the judge. A final order which takes effect under this paragraph shall be subject to review only as provided under subparagraph (D). (E) Judicial review.-- (i) Filing of action for review.--Any person against whom an order imposing a civil money penalty has been entered after an agency hearing under this paragraph may obtain review by the United States district court for any district in which such person is located or the United States District Court for the District of Columbia by filing a notice of appeal in such court within 30 days from the date of such order, and simultaneously sending a copy of such notice be registered mail to the Secretary. (ii) Certification of administrative record.--The Secretary shall promptly certify and file in such court the record upon which the penalty was imposed. (iii) Standard for review.--The findings of the Secretary shall be set aside only if found to be unsupported by substantial evidence as provided by section 706(2)(E) of title 5, United States Code. (iv) Appeal.--Any final decision, order, or judgment of such district court concerning such review shall be subject to appeal as provided in chapter 83 of title 28 of such Code. (F) Failure to pay assessment; maintenance of action.-- (i) Failure to pay assessment.--If any person fails to pay an assessment after it has become a final and unappealable order, or after the court has entered final judgment in favor of the Secretary, the Secretary shall refer the matter to the Attorney General who shall recover the amount assessed by action in the appropriate United States district court. (ii) Nonreviewability.--In such action the validity and appropriateness of the final order imposing the penalty shall not be subject to review. (G) Payment of penalties.--Except as otherwise provided, penalties collected under this paragraph shall be paid to the Secretary (or other officer) imposing the penalty and shall be available without appropriation and until expended for the purpose of enforcing the provisions with respect to which the penalty was imposed. (2) Federal enforcement only if no enforcement through state.--Paragraph (1) shall apply to enforcement of the requirements of section 101, 102, or 103 (other than section 103(e)) with respect to any entity which offers health insurance coverage and which is an insurer or HMO regulated by a State only if the Secretary of Health and Human Services has determined that such State has not provided for enforcement of State laws which govern the same matters as are governed by such section and which require compliance by such entity with at least the same requirements as those provided under such section. (3) Nonduplication of sanctions.--In no case shall a civil money penalty be imposed under this subsection for a violation of this subtitle for which an excise tax has been imposed under section 4980B of the Internal Revenue Code of 1986 or for which a civil money penalty has been imposed under the authority provided under subsection (b). (d) Coordination in Administration.--The Secretaries of the Treasury, Labor, and Health and Human Services shall issue regulations that are nonduplicative to carry out this subtitle. Such regulations shall be issued in a manner that assures coordination and nonduplication in their activities under this subtitle. Subtitle B--Certain Requirements for Insurers and HMOs in the Group and Individual Markets PART 1--AVAILABILITY OF GROUP HEALTH INSURANCE COVERAGE SEC. 131. GUARANTEED AVAILABILITY OF GENERAL COVERAGE IN THE SMALL GROUP MARKET. (a) Issuance of Coverage.-- (1) In general.--Subject to the succeeding subsections of this section, each insurer or HMO that offers health insurance coverage in the small group market in a State-- (A) must accept every small employer in the State that applies for such coverage; and (B) must accept for enrollment under such coverage every eligible individual (as defined in paragraph (2)) who applies for enrollment during the initial period in which the individual first becomes eligible for coverage under the group health plan and may not place any restriction which is inconsistent with section 103(a) on an individual being a participant or beneficiary so long as such individual is an eligible individual. (2) Eligible individual defined.--In this section, the term ``eligible individual'' means, with respect to an insurer or HMO that offers health insurance coverage to any small employer in the small group market, such an individual in relation to the employer as shall be determined-- (A) in accordance with the terms of such plan, (B) as provided by the insurer or HMO under rules of the insurer or HMO which are uniformly applicable, and (C) in accordance with all applicable State laws governing such insurer or HMO. (b) Special Rules for Network Plans and HMOs.-- (1) In general.--In the case of an insurer that offers health insurance coverage in the small group market through a network plan and in the case of an HMO that offers health insurance coverage in connection with such a plan, the insurer or HMO may-- (A) limit the employers that may apply for such coverage to those with eligible individuals whose place of employment or residence is in the service area for such plan or HMO; (B) limit the individuals who may be enrolled under such coverage to those whose place of residence or employment is within the service area for such plan or HMO; and (C) within the service area of such plan or HMO, deny such coverage to such employers if the insurer or HMO demonstrates that-- (i) it will not have the capacity to deliver services adequately to enrollees of any additional groups because of its obligations to [[Page H3050]] existing group contract holders and enrollees, and (ii) it is applying this paragraph uniformly to all employers without regard to the claims experience of those employers and their employees (and their beneficiaries) or the health status of such employees and beneficiaries. (2) 180-day suspension upon denial of coverage.--An insurer or HMO, upon denying health insurance coverage in any service area in accordance with paragraph (1)(C), may not offer coverage in the small group market within such service area for a period of 180 days after such coverage is denied. (c) Special Rule for Financial Capacity Limits.-- (1) In general.--An insurer or HMO may deny health insurance coverage in the small group market if the insurer or HMO demonstrates to the applicable State authority that-- (A) it does not have the financial reserves necessary to underwrite additional coverage, and (B) it is applying this paragraph uniformly to all employers without regard to the claims experience or duration of coverage of those employers and their employees (and their beneficiaries) or the health status of such employees and beneficiaries. (2) 180-day suspension upon denial of coverage.--An insurer or HMO upon denying health insurance coverage in connection with group health plans in any service area in accordance with paragraph (1) may not offer coverage in connection with group health plans in the small group market within such service area for a period of 180 days after such coverage is denied. (d) Exception to Requirement for Issuance of Coverage by Reason of Failure by Plan To Meet Certain Minimum Participation or Contribution Rules.-- (1) In general.--Subsection (a) shall not apply in the case of any group health plan with respect to which-- (A) participation rules of an insurer or HMO which are described in paragraph (2) are not met, or (B) contribution rules of an insurer or HMO which are described in paragraph (3) are not met. (2) Participation rules.--For purposes of paragraph (1)(A), participation rules (if any) of an insurer or HMO shall be treated as met with respect to a group health plan only if such rules are uniformly applicable and in accordance with applicable State law and the number or percentage of eligible individuals who, under the plan, are participants or beneficiaries equals or exceeds a level which is determined in accordance with such rules. (3) Contribution rules.--For purposes of paragraph (1)(B), contribution rules (if any) of an insurer or HMO shall be treated as met with respect to a group health plan only if such rules are in accordance with applicable State law. SEC. 132. GUARANTEED RENEWABILITY OF GROUP COVERAGE. (a) In General.--Except as provided in this section, if an insurer or health maintenance organization offers health insurance coverage in the small or large group market, the insurer or organization must renew or continue in force such coverage at the option of the employer. (b) General Exceptions.--An insurer or organization may nonrenew or discontinue health insurance coverage offered an employer based only on one or more of the following: (1) Nonpayment of premiums.--The employer has failed to pay premiums or contributions in accordance with the terms of the health insurance coverage or the insurer or organization has not received timely premium payments. (2) Fraud.--The employer has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of the coverage. (3) Violation with participation or contribution rules.-- The employer has failed to comply with a material plan provision relating to participation or contribution rules in accordance with section 131(d). (4) Termination of plan.--Subject to subsection (c), the insurer or organization is ceasing to offer coverage in the small or large group market in a State (or, in the case of a network plan or HMO, in a geographic area). (5) Movement outside service area.--The employer has changed the place of employment in such manner that employees and dependents reside and are employed outside the service area of the insurer or organization or outside the area for which the insurer or organization is authorized to do business. Paragraph (5) shall apply to an insurer or HMO only if it is applied uniformly without regard to the claims experience of employers and their employees (and their beneficiaries) or the health status of such employees and beneficiaries. (c) Exceptions for Uniform Termination of Coverage.-- (1) Particular type of coverage not offered.--In any case in which a insurer or HMO decides to discontinue offering a particular type of health insurance coverage in the small or large group market, coverage of such type may be discontinued by the insurer or organization only if-- (A) the insurer or organization provides notice to each employer provided coverage of this type in such market (and participants and beneficiaries covered under such coverage) of such discontinuation at least 90 days prior to the date of the discontinuation of such coverage; (B) the insurer or organization offers to each employer in the small employer or large employer market provided coverage of this type, the option to purchase any other health insurance coverage currently being offered by the insurer or organization for employers in such market; and (C) in exercising the option to discontinue coverage of this type and in offering one or more replacement coverage, the insurer or organization acts uniformly without regard to the health status or insurability of participants or beneficiaries covered or new participants or beneficiaries who may become eligible for such coverage. (2) Discontinuance of all coverage.-- (A) In general.--Subject to subparagraph (C), in any case in which an insurer or HMO elects to discontinue offering all health insurance coverage in the small group market or the large group market, or both markets, in a State, health insurance coverage may be discontinued by the insurer or organization only if-- (i) the insurer or organization provides notice to the applicable State authority and to each employer (and participants and beneficiaries covered under such coverage) of such discontinuation at least 180 days prior to the date of the expiration of such coverage, and (ii) all health insurance issued or delivered for issuance in the State in such market (or markets) are discontinued and coverage under such health insurance coverage in such market (or markets) is not renewed. (B) Prohibition on market reentry.--In the case of a discontinuation under subparagraph (A) in one or both markets, the insurer or organization may not provide for the issuance of any health insurance coverage in the market and State involved during the 5-year period beginning on the date of the discontinuation of the last health insurance coverage not so renewed. (d) Exception for Uniform Modification of Coverage.--At the time of coverage renewal, an insurer or HMO may modify the coverage offered to a group health plan in the group health market so long as such modification is effective on a uniform basis among group health plans with that type of coverage. PART 2--AVAILABILITY OF INDIVIDUAL HEALTH INSURANCE COVERAGE SEC. 141. GUARANTEED AVAILABILITY OF INDIVIDUAL HEALTH INSURANCE COVERAGE TO CERTAIN INDIVIDUALS WITH PRIOR GROUP COVERAGE. (a) Goals.--The goals of this section are-- (1) to guarantee that any qualifying individual (as defined in subsection (b)(1)) is able to obtain qualifying coverage (as defined in subsection (b)(2)); and (2) to assure that qualifying individuals obtaining such coverage receive credit for their prior coverage toward the new coverage's preexisting condition exclusion period (if any) in a manner consistent with subsection (b)(3). (b) Qualifying Individual and Health Insurance Coverage Defined.--In this section-- (1) Qualifying individual.--The term ``qualifying individual'' means an individual-- (A)(i) for whom, as of the date on which the individual seeks coverage under this section, the aggregate of the qualified coverage periods (as defined in section 101(b)(3)(B)) is 18 or more months and (ii) whose most recent prior coverage was under a group health plan, governmental plan, or church plan (or health insurance coverage offered in connection with any such plan); (B) who is not eligible for coverage under (i) a group health plan, (ii) part A or part B of title XVIII of the Social Security Act, or (iii) a State plan under title XIX of such Act (or any successor program), and does not have individual health insurance coverage; (C) with respect to whom the most recent coverage within the coverage period described in subparagraph (A)(i) was not terminated based on a factor described in paragraph (1) or (2) of section 132(b); (D) if the individual had been offered the option of continuation coverage under a COBRA continuation provision or under a similar State program, who elected such coverage; and (E) who, if the individual elected such continuation coverage, has exhausted such continuation coverage. In applying subparagraph (A)(i), the reference in section 101(b)(3)(B)(ii) to a 60-day break in coverage is deemed a reference to a 60-day break in any coverage described in section 101(b)(3)(B)(i). (2) Qualifying coverage.-- (A) In general.--The term ``qualifying coverage'' means, with respect to an insurer or HMO in relation to an qualifying individual, individual health insurance coverage for which the actuarial value of the benefits is not less than-- (i) the weighted average actuarial value of the benefits provided by all the individual health insurance coverage issued by the insurer or HMO in the State during the previous year (not including coverage issued under this section), or (ii) the weighted average of the actuarial value of the benefits provided by all the individual health insurance coverage issued by all insurers and HMOs in the State during the previous year (not including coverage issued under this section), [[Page H3051]] as elected by the plan or by the State under subsection (c)(1). (B) Assumptions.--For purposes of subparagraph (A), the actuarial value of benefits provided under individual health insurance coverage shall be calculated based on a standardized population and a set of standardized utilization and cost factors. (3) Crediting for previous coverage.--Crediting is consistent with this paragraph only if any preexisting condition exclusion period is reduced at least to the extent such a period would be reduced if the coverage under this section were under a group health plan to which section 101(a) applies. In carrying out this subsection, provisions similar to the provisions of section 101(c) shall apply. (c) Optional State Establishment of Mechanisms To Achieve Goals of Guaranteeing Availability of Coverage.-- (1) In general.--Any State may establish, to the extent of the State's authority, public or private mechanisms reasonably designed to meet the goals specified in subsection (a). If a State implements such a mechanism by the deadline specified in paragraph (4), the State may elect to have such mechanisms apply instead of having subsection (d)(3) apply in the State. An election under this paragraph shall be by notice from the chief executive officer of the State to the Secretary of Health and Human Services on a timely basis consistent with the deadlines specified in paragraph (4). In establishing what is qualifying coverage under such a mechanism under this subsection, a State may exercise the election described in subsection (b)(2)(A) with respect to each insurer or HMO in the State (or on a collective basis after exercising such election for each such insurer or HMO). (2) Types of mechanisms.--State mechanisms under this subsection may include one or more (or a combination) of the following: (A) Health insurance coverage pools or programs authorized or established by the State. (B) Mandatory group conversion policies. (C) Guaranteed issue of one or more plans of individual health insurance coverage to qualifying individuals. (D) Open enrollment by one or more insurers or HMOs. The mechanisms described in the previous sentence are not an exclusive list of the mechanisms (or combinations of mechanisms) that may be used under this subsection. (3) Safe harbor for benefits under current risk pools.--In the case of a State that has a health insurance coverage pool or risk pool in effect on March 12, 1996, and that implements the mechanism described in paragraph (2)(A), the benefits under such mechanism (or benefits the actuarial value of which is not less than the actuarial value of such current benefits, using the assumptions described in subsection (b)(2)(B)) are deemed, for purposes of this section, to constitute qualified coverage. (4) Deadline for state implementation.-- (A) In general.--Subject to subparagraph (B), the deadline under this paragraph is July 1, 1997. (B) Extension to permit legislation.--The deadline under this paragraph is July 1, 1998, in the case of a State the legislature of which does not have a regular legislative session at any time between January 1, 1997, and June 30, 1997. (C) Construction.--Nothing in this section shall be construed as preventing a State from-- (i) implementing guaranteed availability mechanisms before the deadline, (ii) continuing in effect mechanisms that are in effect before the date of the enactment of this Act, (iii) offering guaranteed availability of coverage that is not qualifying coverage, or (iv) offering guaranteed availability of coverage to individuals who are not qualifying individuals. (d) Fallback Provisions.-- (1) No state election.--If a State has not provided notice to the Secretary of an election on a timely basis under subsection (c), the Secretary shall notify the State that paragraph (3) will be applied in the State. (2) Preliminary determination after state election.--If-- (A) a State has provided notice of an election on a timely basis under subsection (c), and (B) the Secretary finds, after consultation with the chief executive officer of the State and the insurance commissioner or chief insurance regulatory official of the State, that such a mechanism (for which notice was provided) is not reasonably designed to meet the goals specified in subsection (a), the Secretary shall notify the State of such preliminary determination, of the consequences under paragraph (3) of a failure to implement such a mechanism, and permit the State a reasonable opportunity in which to modify the mechanism (or to adopt another mechanism) that is reasonably designed to meet the goals specified in subsection (a). The Secretary shall not make such a determination on any basis other than the basis described in subparagraph (B). If, after providing such notice and opportunity, the Secretary finds that the State has not implemented such a mechanism, the Secretary shall notify the State that paragraph (3) will be applied in the State. (3) Description of fallback mechanism.--As provided under paragraphs (1) and (2) and subject to paragraph (5), each insurer or HMO in the State involved that issues individual health insurance coverage-- (A) shall offer qualifying health insurance coverage, in which qualifying individuals obtaining such coverage receive credit for their prior coverage toward the new coverage's preexisting condition exclusion period (if any) in a manner consistent with subsection (b)(3), to each qualifyin

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All articles in House section

HEALTH COVERAGE AVAILABILITY AND AFFORDABILITY ACT OF 1996
(House of Representatives - March 28, 1996)

Text of this article available as: TXT PDF [Pages H3045-H3147] {time} 1815 HEALTH COVERAGE AVAILABILITY AND AFFORDABILITY ACT OF 1996 Mr. ARCHER. Mr. Speaker, pursuant to House Resolution 392, I call up the bill (H.R. 3103), to amend the Internal Revenue Code of 1986 to improve portability and continuity of health insurance coverage in the group and individual markets, to combat waste, fraud, and abuse in health insurance and health care delivery, to promote the use of medical savings accounts, to improve access to long-term care services and coverage, to simplify the administration of health insurance, and for other purposes, and ask for its immediate consideration in the House. The Clerk read the title of the bill. The SPEAKER pro tempore (Mr. Combest). Pursuant to House Resolution 392, the amendment in the nature of a substitute consisting of the text of H.R. 3160 modified by the amendment specified in part 1 of House Report 104-501 is adopted. The text of H.R. 3103 consisting of the text of H.R. 3160, as modified, is as follows: H.R. 3160 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) Short Title.--This Act may be cited as the ``Health Coverage Availability and Affordability Act of 1996''. (b) Table of Contents.--The table of contents of this Act is as follows: Sec. 1. Short title; table of contents. TITLE I--IMPROVED AVAILABILITY AND PORTABILITY OF HEALTH INSURANCE COVERAGE Subtitle A--Coverage Under Group Health Plans Sec. 101. Portability of coverage for previously covered individuals. Sec. 102. Limitation on preexisting condition exclusions; no application to certain newborns, adopted children, and pregnancy. Sec. 103. Prohibiting exclusions based on health status and providing for enrollment periods. Sec. 104. Enforcement. Subtitle B--Certain Requirements for Insurers and HMOs in the Group and Individual Markets Part 1--Availability of Group Health Insurance Coverage Sec. 131. Guaranteed availability of general coverage in the small group market. Sec. 132. Guaranteed renewability of group coverage. [[Page H3046]] Part 2--Availability of Individual Health Insurance Coverage Sec. 141. Guaranteed availability of individual health insurance coverage to certain individuals with prior group coverage. Sec. 142. Guaranteed renewability of individual health insurance coverage. Part 3--Enforcement Sec. 151. Incorporation of provisions for State enforcement with Federal fallback authority. Subtitle C--Affordable and Available Health Coverage Through Multiple Employer Pooling Arrangements Sec. 161. Clarification of duty of the Secretary of Labor to implement provisions of current law providing for exemptions and solvency standards for multiple employer health plans. ``Part 7--Rules Governing Regulation of Multiple Employer Health Plans ``Sec. 701. Definitions. ``Sec. 702. Clarification of duty of the Secretary to implement provisions of current law providing for exemptions and solvency standards for multiple employer health plans. ``Sec. 703. Requirements relating to sponsors, boards of trustees, and plan operations. ``Sec. 704. Other requirements for exemption. ``Sec. 705. Maintenance of reserves. ``Sec. 706. Notice requirements for voluntary termination. ``Sec. 707. Corrective actions and mandatory termination. ``Sec. 708. Additional rules regarding State authority.''. Sec. 162. Affordable and available fully insured health coverage through voluntary health insurance associations. Sec. 163. State authority fully applicable to self-insured multiple employer welfare arrangements providing medical care which are not exempted under new part 7. Sec. 164. Clarification of treatment of single employer arrangements. Sec. 165. Clarification of treatment of certain collectively bargained arrangements. Sec. 166. Treatment of church plans. Sec. 167. Enforcement provisions relating to multiple employer welfare arrangements. Sec. 168. Cooperation between Federal and State authorities. Sec. 169. Filing and disclosure requirements for multiple employer welfare arrangements offering health benefits. Sec. 170. Single annual filing for all participating employers. Sec. 171. Effective date; transitional rule. Subtitle D--Definitions; General Provisions Sec. 191. Definitions; scope of coverage. Sec. 192. State flexibility to provide greater protection. Sec. 193. Effective date. Sec. 194. Rule of construction. Sec. 195. Findings relating to exercise of commerce clause authority. TITLE II--PREVENTING HEALTH CARE FRAUD AND ABUSE; ADMINISTRATIVE SIMPLIFICATION; MEDICAL LIABILITY REFORM Sec. 200. References in title. Subtitle A--Fraud and Abuse Control Program Sec. 201. Fraud and abuse control program. Sec. 202. Medicare integrity program. Sec. 203. Beneficiary incentive programs. Sec. 204. Application of certain health anti-fraud and abuse sanctions to fraud and abuse against Federal health care programs. Sec. 205. Guidance regarding application of health care fraud and abuse sanctions. Subtitle B--Revisions to Current Sanctions for Fraud and Abuse Sec. 211. Mandatory exclusion from participation in medicare and State health care programs. Sec. 212. Establishment of minimum period of exclusion for certain individuals and entities subject to permissive exclusion from medicare and State health care programs. Sec. 213. Permissive exclusion of individuals with ownership or control interest in sanctioned entities. Sec. 214. Sanctions against practitioners and persons for failure to comply with statutory obligations. Sec. 215. Intermediate sanctions for medicare health maintenance organizations. Sec. 216. Additional exception to anti-kickback penalties for discounting and managed care arrangements. Sec. 217. Criminal penalty for fraudulent disposition of assets in order to obtain medicaid benefits. Sec. 218. Effective date. Subtitle C--Data Collection Sec. 221. Establishment of the health care fraud and abuse data collection program. Subtitle D--Civil Monetary Penalties Sec. 231. Social security act civil monetary penalties. Sec. 232. Clarification of level of intent required for imposition of sanctions. Sec. 233. Penalty for false certification for home health services. Subtitle E--Revisions to Criminal Law Sec. 241. Definitions relating to Federal health care offense. Sec. 242. Health care fraud. Sec. 243. Theft or embezzlement. Sec. 244. False statements. Sec. 245. Obstruction of criminal investigations of health care offenses. Sec. 246. Laundering of monetary instruments. Sec. 247. Injunctive relief relating to health care offenses. Sec. 248. Authorized investigative demand procedures. Sec. 249. Forfeitures for Federal health care offenses. Sec. 250. Relation to ERISA authority. Subtitle F--Administrative Simplification Sec. 251. Purpose. Sec. 252. Administrative simplification. ``Part C--Administrative Simplification ``Sec. 1171. Definitions. ``Sec. 1172. General requirements for adoption of standards. ``Sec. 1173. Standards for information transactions and data elements. ``Sec. 1174. Timetables for adoption of standards. ``Sec. 1175. Requirements. ``Sec. 1176. General penalty for failure to comply with requirements and standards. ``Sec. 1177. Wrongful disclosure of individually identifiable health information. ``Sec. 1178. Effect on State law. Sec. 253. Changes in membership and duties of National Committee on Vital and Health Statistics. Subtitle G--Duplication and Coordination of Medicare-Related Plans Sec. 261. Duplication and coordination of medicare-related plans. Subtitle H--Medical Liability Reform Part 1--General Provisions Sec. 271. Federal reform of health care liability actions. Sec. 272. Definitions. Sec. 273. Effective date. Part 2--Uniform Standards for Health Care Liability Actions Sec. 281. Statute of limitations. Sec. 282. Calculation and payment of damages. Sec. 283. Alternative dispute resolution. TITLE III--TAX-RELATED HEALTH PROVISIONS Sec. 300. Amendment of 1986 code. Subtitle A--Medical Savings Accounts Sec. 301. Medical savings accounts. Subtitle B--Increase in Deduction for Health Insurance Costs of Self- Employed Individuals Sec. 311. Increase in deduction for health insurance costs of self- employed individuals. Subtitle C--Long-Term Care Services and Contracts Part I--General Provisions Sec. 321. Treatment of long-term care insurance. Sec. 322. Qualified long-term care services treated as medical care. Sec. 323. Reporting requirements. Part II--Consumer Protection Provisions Sec. 325. Policy requirements. Sec. 326. Requirements for issuers of long-term care insurance policies. Sec. 327. Coordination with State requirements. Sec. 328. Effective dates. Subtitle D--Treatment of Accelerated Death Benefits Sec. 331. Treatment of accelerated death benefits by recipient. Sec. 332. Tax treatment of companies issuing qualified accelerated death benefit riders. Subtitle E--High-Risk Pools Sec. 341. Exemption from income tax for State-sponsored organizations providing health coverage for high-risk individuals. Subtitle F--Organizations Subject to Section 833 Sec. 351. Organizations subject to section 833. TITLE IV--REVENUE OFFSETS Sec. 400. Amendment of 1986 Code. Subtitle A--Repeal of Bad Debt Reserve Method for Thrift Savings Associations Sec. 401. Repeal of bad debt reserve method for thrift savings associations. Subtitle B--Reform of the Earned Income Credit Sec. 411. Earned income credit denied to individuals not authorized to be employed in the United States. Subtitle C--Treatment of Individuals Who Lose United States Citizenship Sec. 421. Revision of income, estate, and gift taxes on individuals who lose United States citizenship. Sec. 422. Information on individuals losing United States citizenship. Sec. 423. Report on tax compliance by United States citizens and residents living abroad. [[Page H3047]] TITLE I--IMPROVED AVAILABILITY AND PORTABILITY OF HEALTH INSURANCE COVERAGE Subtitle A--Coverage Under Group Health Plans SEC. 101. PORTABILITY OF COVERAGE FOR PREVIOUSLY COVERED INDIVIDUALS. (a) Crediting Periods of Previous Coverage Toward Preexisting Condition Restrictions.--Subject to the succeeding provisions of this section, a group health plan, and an insurer or health maintenance organization offering health insurance coverage in connection with a group health plan, shall provide that any preexisting condition limitation period (as defined in subsection (b)(2)) is reduced by the length of the aggregate period of qualified prior coverage (if any, as defined in subsection (b)(3)) applicable to the participant or beneficiary as of the date of commencement of coverage under the plan. (b) Definitions and Other Provisions Relating to Preexisting Conditions.-- (1) Preexisting condition.-- (A) In general.--For purposes of this subtitle, subject to subparagraph (B), the term ``preexisting condition'' means a condition, regardless of the cause of the condition, for which medical advice, diagnosis, care, or treatment was recommended or received within the 6-month period ending on the day before-- (i) the effective date of the coverage of such participant or beneficiary, or (ii) the earliest date upon which such coverage could have been effective if there were no waiting period applicable, whichever is earlier. (B) Treatment of genetic information.--For purposes of this section, genetic information shall not be considered to be a preexisting condition, so long as treatment of the condition to which the information is applicable has not been sought during the 6-month period described in subparagraph (A). (2) Preexisting condition limitation period.--For purposes of this subtitle, the term ``preexisting condition limitation period'' means, with respect to coverage of an individual under a group health plan or under health insurance coverage, the period during which benefits with respect to treatment of a condition of such individual are not provided based on the fact that the condition is a preexisting condition. (3) Aggregate period of qualified prior coverage.-- (A) In general.--For purposes of this section, the term ``aggregate period of qualified prior coverage'' means, with respect to commencement of coverage of an individual under a group health plan or health insurance coverage offered in connection with a group health plan, the aggregate of the qualified coverage periods (as defined in subparagraph (B)) of such individual occurring before the date of such commencement. Such period shall be treated as zero if there is more than a 60-day break in coverage under a group health plan (or health insurance coverage offered in connection with such a plan) between the date the most recent qualified coverage period ends and the date of such commencement. (B) Qualified coverage period.-- (i) In general.--For purposes of this paragraph, subject to subsection (c), the term ``qualified coverage period'' means, with respect to an individual, any period of coverage of the individual under a group health plan, health insurance coverage, under title XVIII or XIX of the Social Security Act, coverage under the TRICARE program under chapter 55 of title 10, United States Code, a program of the Indian Health Service, and State health insurance coverage or risk pool, and includes coverage under a health plan offered under chapter 89 of title 5, United States Code. (ii) Disregarding periods before breaks in coverage.--Such term does not include any period occurring before any 60-day break in coverage described in subparagraph (A). (C) Waiting period not treated as a break in coverage.--For purposes of subparagraphs (A) and (B), any period that is in a waiting period for any coverage under a group health plan (or for health insurance coverage offered in connection with a group health plan) shall not be considered to be a break in coverage described in subparagraph (B)(ii). (D) Establishment of period.--A qualified coverage period with respect to an individual shall be established through presentation of certifications described in subsection (c) or in such other manner as may be specified in regulations to carry out this title. (c) Certifications of Coverage; Conforming Coverage.-- (1) In general.--The plan administrator of a group health plan, or the insurer or HMO offering health insurance coverage in connection with a group health plan, shall, on request made on behalf of an individual covered (or previously covered within the previous 18 months) under the plan or coverage, provide for a certification of the period of coverage of the individual under such plan or coverage and of the waiting period (if any) imposed with respect to the individual for any coverage under the plan. (2) Standard method.--Subject to paragraph (3), a group health plan, or insurer or HMO offering health insurance coverage in connection with a group health plan, shall determine qualified coverage periods under subsection (b)(3)(B) by including all periods described in such subsection, without regard to the specific benefits offered during such a period. (3) Alternative method.--Such a plan, insurer, or HMO may elect to make such determination on a benefit-specific basis for all participants and beneficiaries and not to include as a qualified coverage period with respect to a specific benefit coverage during a previous period unless such previous coverage for that benefit was included at the end of the most recent period of coverage. In the case of such an election-- (A) the plan, insurer, or HMO shall prominently state in any disclosure statements concerning the plan or coverage and to each enrollee at the time of enrollment under the plan (or at the time the health insurance coverage is offered for sale in the group health market) that the plan or coverage has made such election and shall include a description of the effect of this election; and (B) upon the request of the plan, insurer, or HMO, the entity providing a certification under paragraph (1)-- (i) shall promptly disclose to the requesting plan, insurer, or HMO the plan statement (insofar as it relates to health benefits under the plan) or other detailed benefit information on the benefits available under the previous plan or coverage, and (ii) may charge for the reasonable cost of providing such information. SEC. 102. LIMITATION ON PREEXISTING CONDITION EXCLUSIONS; NO APPLICATION TO CERTAIN NEWBORNS, ADOPTED CHILDREN, AND PREGNANCY. (a) Limitation of Period.-- (1) In general.--Subject to the succeeding provisions of this section, a group health plan, and an insurer or HMO offering health insurance coverage in connection with a group health plan, shall provide that any preexisting condition limitation period (as defined in section 101(b)(2)) does not exceed 12 months, counting from the effective date of coverage. (2) Extension of period in the case of late enrollment.--In the case of a participant or beneficiary whose initial coverage commences after the date the participant or beneficiary first becomes eligible for coverage under the group health plan, the reference in paragraph (1) to ``12 months'' is deemed a reference to ``18 months''. (b) Exclusion Not Applicable to Certain Newborns and Certain Adoptions.-- (1) In general.--Subject to paragraph (2), a group health plan, and an insurer or HMO offering health insurance coverage in connection with a group health plan, may not provide any limitation on benefits based on the existence of a preexisting condition in the case of-- (A) an individual who within the 30-day period beginning with the date of birth, or (B) an adopted child or a child placed for adoption beginning at the time of adoption or placement if the individual, within the 30-day period beginning on the date of adoption or placement, becomes covered under a group health plan or otherwise becomes covered under health insurance coverage (or covered for medical assistance under title XIX of the Social Security Act). (2) Loss if break in coverage.--Paragraph (1) shall no longer apply to an individual if the individual does not have any coverage described in section 101(b)(3)(B)(i) for a continuous period of 60 days, not counting in such period any days that are in a waiting period for any coverage under a group health plan. (3) Placed for adoption defined.--In this subsection and section 103(e), the term ``placement'', or being ``placed'', for adoption, in connection with any placement for adoption of a child with any person, means the assumption and retention by such person of a legal obligation for total or partial support of such child in anticipation of adoption of such child. The child's placement with such person terminates upon the termination of such legal obligation. (c) Exclusion Not Applicable to Pregnancy.--For purposes of this section, pregnancy shall not be treated as a preexisting condition. (d) Eligibility Period Imposed by Health Maintenance Organizations as Alternative to Preexisting Condition Limitation.--A health maintenance organization which offers health insurance coverage in connection with a group health plan and which does not use the preexisting condition limitations allowed under this section and section 101 with respect to any particular coverage option may impose an eligibility period for such coverage option, but only if such period does not exceed-- (1) 60 days, in the case of a participant or beneficiary whose initial coverage commences at the time such participant or beneficiary first becomes eligible for coverage under the plan, or (2) 90 days, in the case of a participant or beneficiary whose initial coverage commences after the date on which such participant or beneficiary first becomes eligible for coverage. Such an HMO may use alternative methods, from those described in the previous sentence, to address adverse selection as approved by the applicable State authority. For purposes of this subsection, the term ``eligibility period'' means a period which, under the terms of the health insurance coverage offered by the health maintenance organization, must expire before the health insurance coverage becomes effective. Any such eligibility period shall be treated for purposes of this subtitle as a waiting period under the plan and shall run concurrently [[Page H3048]] with any other applicable waiting period under the plan. SEC. 103. PROHIBITING EXCLUSIONS BASED ON HEALTH STATUS AND PROVIDING FOR ENROLLMENT PERIODS. (a) Prohibition of Exclusion of Participants or Beneficiaries Based on Health Status.-- (1) In general.--A group health plan, and an insurer or HMO offering health insurance coverage in connection with a group health plan, may not exclude an employee or his or her beneficiary from being (or continuing to be) enrolled as a participant or beneficiary under the terms of such plan or coverage based on health status (as defined in section 191(c)(6)). (2) Construction.--Nothing in this subsection shall be construed as preventing the establishment of preexisting condition limitations and restrictions to the extent consistent with the provisions of this subtitle. (b) Prohibition of Discrimination in Premium Contributions of Individual Participants or Beneficiaries Based on Health Status.-- (1) In general.--A group health plan, and an insurer or HMO offering health insurance coverage in connection with a group health plan, may not require a participant or beneficiary to pay a premium or contribution which is greater than such premium or contribution for a similarly situated participant or beneficiary solely on the basis of the health status of the participant or beneficiary. (2) Construction.--Nothing in this subsection is intended-- (A) to effect the premium rates an insurer or HMO may charge an employer for health insurance coverage provided in connection a group health plan, (B) to prevent a group health plan (or insurer or HMO in health insurance coverage offered in connection with such a plan) from establishing premium discounts or modifying otherwise applicable copayments or deductibles in return for adherence to programs of health promotion and disease prevention, or (C) to prevent such a plan, insurer, or HMO from varying the premiums or contributions required of participants or beneficiaries based on factors (such as scope of benefits, geographic area of residence, or wage levels) that are not directly related to health status. (c) Enrollment of Eligible Individuals Who Lose Other Coverage.--A group health plan shall permit an uncovered employee who is otherwise eligible for coverage under the terms of the plan (or an uncovered dependent, as defined under the terms of the plan, of such an employee, if family coverage is available) to enroll for coverage under the plan under at least one benefit option if each of the following conditions is met: (1) The employee or dependent was covered under a group health plan or had health insurance coverage at the time coverage was previously offered to the employee or individual. (2) The employee stated in writing at such time that coverage under a group health plan or health insurance coverage was the reason for declining enrollment. (3) The employee or dependent lost coverage under a group health plan or health insurance coverage (as a result of loss of eligibility for the coverage, termination of employment, or reduction in the number of hours of employment). (4) The employee requests such enrollment within 30 days after the date of termination of such coverage. (d) Dependent Beneficiaries.-- (1) In general.--If a group health plan makes family coverage available, the plan may not require, as a condition of coverage of an individual as a dependent (as defined under the terms of the plan) of a participant in the plan, a waiting period applicable to the coverage of a dependent who-- (A) is a newborn, (B) is an adopted child or child placed for adoption (within the meaning of section 102(b)(3)), at the time of adoption or placement, or (C) is a spouse, at the time of marriage, if the participant has met any waiting period applicable to that participant. (2) Timely enrollment.-- (A) In general.--Enrollment of a participant's beneficiary described in paragraph (1) shall be considered to be timely if a request for enrollment is made within 30 days of the date family coverage is first made available or, in the case described in-- (i) paragraph (1)(A), within 30 days of the date of the birth, (ii) paragraph (1)(B), within 30 days of the date of the adoption or placement for adoption, or (iii) paragraph (1)(C), within 30 days of the date of the marriage with such a beneficiary who is the spouse of the participant, if family coverage is available as of such date. (B) Coverage.--If available coverage includes family coverage and enrollment is made under such coverage on a timely basis under subparagraph (A), the coverage shall become effective not later than the first day of the first month beginning 15 days after the date the completed request for enrollment is received. (e) Multiemployer Plans, Multiple Employer Health Plans, and Multiple Employer Welfare Arrangements.--A group health plan which is a multi-employer plan, a multiple employer health plan (as defined in section 701(4) of the Employee Retirement Income Security Act of 1974), or a multiple employer welfare arrangement (to the extent to which benefits under the arrangement consist of medical care) may not deny an employer whose employees are covered under such a plan or arrangement continued access to the same or different coverage under the terms of such a plan or arrangement, other than-- (1) for nonpayment of contributions, (2) for fraud or other intentional misrepresentation of material fact by the employer, (3) for noncompliance with material plan or arrangement provisions, (4) because the plan or arrangement is ceasing to offer any coverage in a geographic area, (5) for failure to meet the terms of an applicable collective bargaining agreement, to renew a collective bargaining or other agreement requiring or authorizing contributions to the plan, or to employ employees covered by such an agreement, (6) in the case of a plan or arrangement to which subparagraph (C), (D), or (E) of section 3(40) of the Employee Retirement Income Security Act of 1974 applies, to the extent necessary to meet the requirements of such subparagraph, or (7) in the case of a multiple employer health plan (as defined in section 701(4) of such Act), for failure to meet the requirements under part 7 of subtitle B of title I of such Act for exemption under section 514(b)(6)(B) of such Act. SEC. 104. ENFORCEMENT. (a) Enforcement Through COBRA Provisions in Internal Revenue Code.-- (1) Application of cobra sanctions.--Subsection (a) of section 4980B of the Internal Revenue Code of 1986 is amended by striking ``the requirements of'' and all that follows and inserting ``the requirements of-- ``(1) subsection (f) with respect to any qualified beneficiary, or ``(2) subject to subsection (h)-- ``(A) section 101 or 102 of the Health Coverage Availability and Affordability Act of 1996 with respect to any individual covered under the group health plan, or ``(B) section 103 (other than subsection (e)) of such Act with respect to any individual.''. (2) Notice requirement.--Section 4980B(f)(6)(A) of such Code is amended by inserting before the period the following: ``and subtitle A of title I of the Health Coverage Availability and Affordability Act of 1996''. (3) Special rules.--Section 4980B of such Code is amended by adding at the end the following: ``(h) Special Rules.--For purposes of applying this section in the case of requirements described in subsection (a)(2) relating to section 101, section 102, or section 103 (other than subsection (e)) of the Health Coverage Availability and Affordability Act of 1996-- ``(1) In general.-- ``(A) Definition of group health plan.--The term `group health plan' has the meaning given such term in section 191(a) of the Health Coverage Availability and Affordability Act of 1996. ``(B) Qualified beneficiary.--Subsections (b), (c), and (e) shall be applied by substituting the term `individual' for the term `qualified beneficiary' each place it appears. ``(C) Noncompliance period.--Clause (ii) of subsection (b)(2)(B) and the second sentence of subsection (b)(2) shall not apply. ``(D) Limitation on tax.--Subparagraph (B) of subsection (c)(3) shall not apply. ``(E) Liability for tax.--Paragraph (2) of subsection (e) shall not apply. ``(2) Deferral to state regulation.--No tax shall be imposed by this section on any failure to meet the requirements of such section by any entity which offers health insurance coverage and which is an insurer or health maintenance organization (as defined in section 191(c) of the Health Coverage Availability and Affordability Act of 1996) regulated by a State unless the Secretary of Health and Human Services has made the determination described in section 104(c)(2) of such Act with respect to such State, section, and entity. ``(3) Limitation for insured plans.--In the case of a group health plan of a small employer (as defined in section 191 of the Health Coverage Availability and Affordability Act of 1996) that provides health care benefits solely through a contract with an insurer or health maintenance organization (as defined in such section), no tax shall be imposed by this section upon the employer on a failure to meet such requirements if the failure is solely because of the product offered by the insurer or organization under such contract. ``(4) Limitation on imposition of tax.--In no case shall a tax be imposed by this section for a failure to meet such a requirement if-- ``(A) a civil money penalty has been imposed by the Secretary of Labor under part 5 of subtitle A of title I of the Employee Retirement Income Security Act of 1974 with respect to such failure, or ``(B) a civil money penalty has been imposed by the Secretary of Health and Human Services under section 104(c) of the Health Coverage Availability and Affordability Act of 1996 with respect to such failure.''. (b) Enforcement Through ERISA Sanctions for Certain Group Health Plans.-- (1) In general.--Subject to the succeeding provisions of this subsection, sections 101 through 103 of this subtitle (and subtitle D insofar as it is applicable to such sections) shall be deemed to be provisions of title I of the Employee Retirement Income Security [[Page H3049]] Act of 1974 for purposes of applying such title. (2) Federal enforcement only if no enforcement through state.--The Secretary of Labor shall enforce each section referred to in paragraph (1) with respect to any entity which is an insurer or health maintenance organization regulated by a State only if the Secretary of Labor determines that such State has not provided for enforcement of State laws which govern the same matters as are governed by such section and which require compliance by such entity with at least the same requirements as those provided under such section. (3) Limitations on liability.-- (A) No application where failure not discovered exercising reasonable diligence.--No liability shall be imposed under this subsection on the basis of any failure during any period for which it is established to the satisfaction of the Secretary of Labor that none of the persons against whom the liability would be imposed knew, or exercising reasonable diligence would have known, that such failure existed. (B) No application where failure corrected within 30 days.--No liability shall be imposed under this subsection on the basis of any failure if such failure was due to reasonable cause and not to willful neglect, and such failure is corrected during the 30-day period beginning on the first day any of the persons against whom the liability would be imposed knew, or exercising reasonable diligence would have known, that such failure existed. (4) Avoiding duplication of certain penalties.--In no case shall a civil money penalty be imposed under the authority provided under paragraph (1) for a violation of this subtitle for which an excise tax has been imposed under section 4980B of the Internal Revenue Code of 1986 or a civil money penalty imposed under subsection (c). (c) Enforcement Through Civil Money Penalties.-- (1) Imposition.-- (A) In general.--Subject to the succeeding provisions of this subsection, any group health plan, insurer, or organization that fails to meet a requirement of this subtitle (other than section 103(e)) is subject to a civil money penalty under this section. (B) Liability for penalty.--Rules similar to the rules described in section 4980B(e) of the Internal Revenue Code of 1986 for liability for a tax imposed under section 4980B(a) of such Code shall apply to liability for a penalty imposed under subparagraph (A). (C) Amount of penalty.-- (i) In general.--The maximum amount of penalty imposed under this paragraph is $100 for each day for each individual with respect to which such a failure occurs. (ii) Considerations in imposition.--In determining the amount of any penalty to be assessed under this paragraph, the Secretary of Health and Human Services shall take into account the previous record of compliance of the person being assessed with the applicable requirements of this subtitle, the gravity of the violation, and the overall limitations for unintentional failures provided under section 4980B(c)(4) of the Internal Revenue Code of 1986. (iii) Limitations.-- (I) Penalty not to apply where failure not discovered exercising reasonable diligence.--No civil money penalty shall be imposed under this paragraph on any failure during any period for which it is established to the satisfaction of the Secretary that none of the persons against whom the penalty would be imposed knew, or exercising reasonable diligence would have known, that such failure existed. (II) Penalty not to apply to failures corrected within 30 days.--No civil money penalty shall be imposed under this paragraph on any failure if such failure was due to reasonable cause and not to willful neglect, and such failure is corrected during the 30-day period beginning on the first day any of the persons against whom the penalty would be imposed knew, or exercising reasonable diligence would have known, that such failure existed. (D) Administrative review.-- (i) Opportunity for hearing.--The person assessed shall be afforded an opportunity for hearing by the Secretary upon request made within 30 days after the date of the issuance of a notice of assessment. In such hearing the decision shall be made on the record pursuant to section 554 of title 5, United States Code. If no hearing is requested, the assessment shall constitute a final and unappealable order. (ii) Hearing procedure.--If a hearing is requested, the initial agency decision shall be made by an administrative law judge, and such decision shall become the final order unless the Secretary modifies or vacates the decision. Notice of intent to modify or vacate the decision of the administrative law judge shall be issued to the parties within 30 days after the date of the decision of the judge. A final order which takes effect under this paragraph shall be subject to review only as provided under subparagraph (D). (E) Judicial review.-- (i) Filing of action for review.--Any person against whom an order imposing a civil money penalty has been entered after an agency hearing under this paragraph may obtain review by the United States district court for any district in which such person is located or the United States District Court for the District of Columbia by filing a notice of appeal in such court within 30 days from the date of such order, and simultaneously sending a copy of such notice be registered mail to the Secretary. (ii) Certification of administrative record.--The Secretary shall promptly certify and file in such court the record upon which the penalty was imposed. (iii) Standard for review.--The findings of the Secretary shall be set aside only if found to be unsupported by substantial evidence as provided by section 706(2)(E) of title 5, United States Code. (iv) Appeal.--Any final decision, order, or judgment of such district court concerning such review shall be subject to appeal as provided in chapter 83 of title 28 of such Code. (F) Failure to pay assessment; maintenance of action.-- (i) Failure to pay assessment.--If any person fails to pay an assessment after it has become a final and unappealable order, or after the court has entered final judgment in favor of the Secretary, the Secretary shall refer the matter to the Attorney General who shall recover the amount assessed by action in the appropriate United States district court. (ii) Nonreviewability.--In such action the validity and appropriateness of the final order imposing the penalty shall not be subject to review. (G) Payment of penalties.--Except as otherwise provided, penalties collected under this paragraph shall be paid to the Secretary (or other officer) imposing the penalty and shall be available without appropriation and until expended for the purpose of enforcing the provisions with respect to which the penalty was imposed. (2) Federal enforcement only if no enforcement through state.--Paragraph (1) shall apply to enforcement of the requirements of section 101, 102, or 103 (other than section 103(e)) with respect to any entity which offers health insurance coverage and which is an insurer or HMO regulated by a State only if the Secretary of Health and Human Services has determined that such State has not provided for enforcement of State laws which govern the same matters as are governed by such section and which require compliance by such entity with at least the same requirements as those provided under such section. (3) Nonduplication of sanctions.--In no case shall a civil money penalty be imposed under this subsection for a violation of this subtitle for which an excise tax has been imposed under section 4980B of the Internal Revenue Code of 1986 or for which a civil money penalty has been imposed under the authority provided under subsection (b). (d) Coordination in Administration.--The Secretaries of the Treasury, Labor, and Health and Human Services shall issue regulations that are nonduplicative to carry out this subtitle. Such regulations shall be issued in a manner that assures coordination and nonduplication in their activities under this subtitle. Subtitle B--Certain Requirements for Insurers and HMOs in the Group and Individual Markets PART 1--AVAILABILITY OF GROUP HEALTH INSURANCE COVERAGE SEC. 131. GUARANTEED AVAILABILITY OF GENERAL COVERAGE IN THE SMALL GROUP MARKET. (a) Issuance of Coverage.-- (1) In general.--Subject to the succeeding subsections of this section, each insurer or HMO that offers health insurance coverage in the small group market in a State-- (A) must accept every small employer in the State that applies for such coverage; and (B) must accept for enrollment under such coverage every eligible individual (as defined in paragraph (2)) who applies for enrollment during the initial period in which the individual first becomes eligible for coverage under the group health plan and may not place any restriction which is inconsistent with section 103(a) on an individual being a participant or beneficiary so long as such individual is an eligible individual. (2) Eligible individual defined.--In this section, the term ``eligible individual'' means, with respect to an insurer or HMO that offers health insurance coverage to any small employer in the small group market, such an individual in relation to the employer as shall be determined-- (A) in accordance with the terms of such plan, (B) as provided by the insurer or HMO under rules of the insurer or HMO which are uniformly applicable, and (C) in accordance with all applicable State laws governing such insurer or HMO. (b) Special Rules for Network Plans and HMOs.-- (1) In general.--In the case of an insurer that offers health insurance coverage in the small group market through a network plan and in the case of an HMO that offers health insurance coverage in connection with such a plan, the insurer or HMO may-- (A) limit the employers that may apply for such coverage to those with eligible individuals whose place of employment or residence is in the service area for such plan or HMO; (B) limit the individuals who may be enrolled under such coverage to those whose place of residence or employment is within the service area for such plan or HMO; and (C) within the service area of such plan or HMO, deny such coverage to such employers if the insurer or HMO demonstrates that-- (i) it will not have the capacity to deliver services adequately to enrollees of any additional groups because of its obligations to [[Page H3050]] existing group contract holders and enrollees, and (ii) it is applying this paragraph uniformly to all employers without regard to the claims experience of those employers and their employees (and their beneficiaries) or the health status of such employees and beneficiaries. (2) 180-day suspension upon denial of coverage.--An insurer or HMO, upon denying health insurance coverage in any service area in accordance with paragraph (1)(C), may not offer coverage in the small group market within such service area for a period of 180 days after such coverage is denied. (c) Special Rule for Financial Capacity Limits.-- (1) In general.--An insurer or HMO may deny health insurance coverage in the small group market if the insurer or HMO demonstrates to the applicable State authority that-- (A) it does not have the financial reserves necessary to underwrite additional coverage, and (B) it is applying this paragraph uniformly to all employers without regard to the claims experience or duration of coverage of those employers and their employees (and their beneficiaries) or the health status of such employees and beneficiaries. (2) 180-day suspension upon denial of coverage.--An insurer or HMO upon denying health insurance coverage in connection with group health plans in any service area in accordance with paragraph (1) may not offer coverage in connection with group health plans in the small group market within such service area for a period of 180 days after such coverage is denied. (d) Exception to Requirement for Issuance of Coverage by Reason of Failure by Plan To Meet Certain Minimum Participation or Contribution Rules.-- (1) In general.--Subsection (a) shall not apply in the case of any group health plan with respect to which-- (A) participation rules of an insurer or HMO which are described in paragraph (2) are not met, or (B) contribution rules of an insurer or HMO which are described in paragraph (3) are not met. (2) Participation rules.--For purposes of paragraph (1)(A), participation rules (if any) of an insurer or HMO shall be treated as met with respect to a group health plan only if such rules are uniformly applicable and in accordance with applicable State law and the number or percentage of eligible individuals who, under the plan, are participants or beneficiaries equals or exceeds a level which is determined in accordance with such rules. (3) Contribution rules.--For purposes of paragraph (1)(B), contribution rules (if any) of an insurer or HMO shall be treated as met with respect to a group health plan only if such rules are in accordance with applicable State law. SEC. 132. GUARANTEED RENEWABILITY OF GROUP COVERAGE. (a) In General.--Except as provided in this section, if an insurer or health maintenance organization offers health insurance coverage in the small or large group market, the insurer or organization must renew or continue in force such coverage at the option of the employer. (b) General Exceptions.--An insurer or organization may nonrenew or discontinue health insurance coverage offered an employer based only on one or more of the following: (1) Nonpayment of premiums.--The employer has failed to pay premiums or contributions in accordance with the terms of the health insurance coverage or the insurer or organization has not received timely premium payments. (2) Fraud.--The employer has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of the coverage. (3) Violation with participation or contribution rules.-- The employer has failed to comply with a material plan provision relating to participation or contribution rules in accordance with section 131(d). (4) Termination of plan.--Subject to subsection (c), the insurer or organization is ceasing to offer coverage in the small or large group market in a State (or, in the case of a network plan or HMO, in a geographic area). (5) Movement outside service area.--The employer has changed the place of employment in such manner that employees and dependents reside and are employed outside the service area of the insurer or organization or outside the area for which the insurer or organization is authorized to do business. Paragraph (5) shall apply to an insurer or HMO only if it is applied uniformly without regard to the claims experience of employers and their employees (and their beneficiaries) or the health status of such employees and beneficiaries. (c) Exceptions for Uniform Termination of Coverage.-- (1) Particular type of coverage not offered.--In any case in which a insurer or HMO decides to discontinue offering a particular type of health insurance coverage in the small or large group market, coverage of such type may be discontinued by the insurer or organization only if-- (A) the insurer or organization provides notice to each employer provided coverage of this type in such market (and participants and beneficiaries covered under such coverage) of such discontinuation at least 90 days prior to the date of the discontinuation of such coverage; (B) the insurer or organization offers to each employer in the small employer or large employer market provided coverage of this type, the option to purchase any other health insurance coverage currently being offered by the insurer or organization for employers in such market; and (C) in exercising the option to discontinue coverage of this type and in offering one or more replacement coverage, the insurer or organization acts uniformly without regard to the health status or insurability of participants or beneficiaries covered or new participants or beneficiaries who may become eligible for such coverage. (2) Discontinuance of all coverage.-- (A) In general.--Subject to subparagraph (C), in any case in which an insurer or HMO elects to discontinue offering all health insurance coverage in the small group market or the large group market, or both markets, in a State, health insurance coverage may be discontinued by the insurer or organization only if-- (i) the insurer or organization provides notice to the applicable State authority and to each employer (and participants and beneficiaries covered under such coverage) of such discontinuation at least 180 days prior to the date of the expiration of such coverage, and (ii) all health insurance issued or delivered for issuance in the State in such market (or markets) are discontinued and coverage under such health insurance coverage in such market (or markets) is not renewed. (B) Prohibition on market reentry.--In the case of a discontinuation under subparagraph (A) in one or both markets, the insurer or organization may not provide for the issuance of any health insurance coverage in the market and State involved during the 5-year period beginning on the date of the discontinuation of the last health insurance coverage not so renewed. (d) Exception for Uniform Modification of Coverage.--At the time of coverage renewal, an insurer or HMO may modify the coverage offered to a group health plan in the group health market so long as such modification is effective on a uniform basis among group health plans with that type of coverage. PART 2--AVAILABILITY OF INDIVIDUAL HEALTH INSURANCE COVERAGE SEC. 141. GUARANTEED AVAILABILITY OF INDIVIDUAL HEALTH INSURANCE COVERAGE TO CERTAIN INDIVIDUALS WITH PRIOR GROUP COVERAGE. (a) Goals.--The goals of this section are-- (1) to guarantee that any qualifying individual (as defined in subsection (b)(1)) is able to obtain qualifying coverage (as defined in subsection (b)(2)); and (2) to assure that qualifying individuals obtaining such coverage receive credit for their prior coverage toward the new coverage's preexisting condition exclusion period (if any) in a manner consistent with subsection (b)(3). (b) Qualifying Individual and Health Insurance Coverage Defined.--In this section-- (1) Qualifying individual.--The term ``qualifying individual'' means an individual-- (A)(i) for whom, as of the date on which the individual seeks coverage under this section, the aggregate of the qualified coverage periods (as defined in section 101(b)(3)(B)) is 18 or more months and (ii) whose most recent prior coverage was under a group health plan, governmental plan, or church plan (or health insurance coverage offered in connection with any such plan); (B) who is not eligible for coverage under (i) a group health plan, (ii) part A or part B of title XVIII of the Social Security Act, or (iii) a State plan under title XIX of such Act (or any successor program), and does not have individual health insurance coverage; (C) with respect to whom the most recent coverage within the coverage period described in subparagraph (A)(i) was not terminated based on a factor described in paragraph (1) or (2) of section 132(b); (D) if the individual had been offered the option of continuation coverage under a COBRA continuation provision or under a similar State program, who elected such coverage; and (E) who, if the individual elected such continuation coverage, has exhausted such continuation coverage. In applying subparagraph (A)(i), the reference in section 101(b)(3)(B)(ii) to a 60-day break in coverage is deemed a reference to a 60-day break in any coverage described in section 101(b)(3)(B)(i). (2) Qualifying coverage.-- (A) In general.--The term ``qualifying coverage'' means, with respect to an insurer or HMO in relation to an qualifying individual, individual health insurance coverage for which the actuarial value of the benefits is not less than-- (i) the weighted average actuarial value of the benefits provided by all the individual health insurance coverage issued by the insurer or HMO in the State during the previous year (not including coverage issued under this section), or (ii) the weighted average of the actuarial value of the benefits provided by all the individual health insurance coverage issued by all insurers and HMOs in the State during the previous year (not including coverage issued under this section), [[Page H3051]] as elected by the plan or by the State under subsection (c)(1). (B) Assumptions.--For purposes of subparagraph (A), the actuarial value of benefits provided under individual health insurance coverage shall be calculated based on a standardized population and a set of standardized utilization and cost factors. (3) Crediting for previous coverage.--Crediting is consistent with this paragraph only if any preexisting condition exclusion period is reduced at least to the extent such a period would be reduced if the coverage under this section were under a group health plan to which section 101(a) applies. In carrying out this subsection, provisions similar to the provisions of section 101(c) shall apply. (c) Optional State Establishment of Mechanisms To Achieve Goals of Guaranteeing Availability of Coverage.-- (1) In general.--Any State may establish, to the extent of the State's authority, public or private mechanisms reasonably designed to meet the goals specified in subsection (a). If a State implements such a mechanism by the deadline specified in paragraph (4), the State may elect to have such mechanisms apply instead of having subsection (d)(3) apply in the State. An election under this paragraph shall be by notice from the chief executive officer of the State to the Secretary of Health and Human Services on a timely basis consistent with the deadlines specified in paragraph (4). In establishing what is qualifying coverage under such a mechanism under this subsection, a State may exercise the election described in subsection (b)(2)(A) with respect to each insurer or HMO in the State (or on a collective basis after exercising such election for each such insurer or HMO). (2) Types of mechanisms.--State mechanisms under this subsection may include one or more (or a combination) of the following: (A) Health insurance coverage pools or programs authorized or established by the State. (B) Mandatory group conversion policies. (C) Guaranteed issue of one or more plans of individual health insurance coverage to qualifying individuals. (D) Open enrollment by one or more insurers or HMOs. The mechanisms described in the previous sentence are not an exclusive list of the mechanisms (or combinations of mechanisms) that may be used under this subsection. (3) Safe harbor for benefits under current risk pools.--In the case of a State that has a health insurance coverage pool or risk pool in effect on March 12, 1996, and that implements the mechanism described in paragraph (2)(A), the benefits under such mechanism (or benefits the actuarial value of which is not less than the actuarial value of such current benefits, using the assumptions described in subsection (b)(2)(B)) are deemed, for purposes of this section, to constitute qualified coverage. (4) Deadline for state implementation.-- (A) In general.--Subject to subparagraph (B), the deadline under this paragraph is July 1, 1997. (B) Extension to permit legislation.--The deadline under this paragraph is July 1, 1998, in the case of a State the legislature of which does not have a regular legislative session at any time between January 1, 1997, and June 30, 1997. (C) Construction.--Nothing in this section shall be construed as preventing a State from-- (i) implementing guaranteed availability mechanisms before the deadline, (ii) continuing in effect mechanisms that are in effect before the date of the enactment of this Act, (iii) offering guaranteed availability of coverage that is not qualifying coverage, or (iv) offering guaranteed availability of coverage to individuals who are not qualifying individuals. (d) Fallback Provisions.-- (1) No state election.--If a State has not provided notice to the Secretary of an election on a timely basis under subsection (c), the Secretary shall notify the State that paragraph (3) will be applied in the State. (2) Preliminary determination after state election.--If-- (A) a State has provided notice of an election on a timely basis under subsection (c), and (B) the Secretary finds, after consultation with the chief executive officer of the State and the insurance commissioner or chief insurance regulatory official of the State, that such a mechanism (for which notice was provided) is not reasonably designed to meet the goals specified in subsection (a), the Secretary shall notify the State of such preliminary determination, of the consequences under paragraph (3) of a failure to implement such a mechanism, and permit the State a reasonable opportunity in which to modify the mechanism (or to adopt another mechanism) that is reasonably designed to meet the goals specified in subsection (a). The Secretary shall not make such a determination on any basis other than the basis described in subparagraph (B). If, after providing such notice and opportunity, the Secretary finds that the State has not implemented such a mechanism, the Secretary shall notify the State that paragraph (3) will be applied in the State. (3) Description of fallback mechanism.--As provided under paragraphs (1) and (2) and subject to paragraph (5), each insurer or HMO in the State involved that issues individual health insurance coverage-- (A) shall offer qualifying health insurance coverage, in which qualifying individuals obtaining such coverage receive credit for their prior coverage toward the new coverage's preexisting condition exclusion period (if any) in a manner consistent with subsection (b)(3), to each